Saving Money Blog

Finance Blogs » Saving Money Blog » 3 bills to re-evaluate yearly

3 bills to re-evaluate yearly

By Paula Pant ·
Monday, November 5, 2012
Posted: 7 am ET

Want to save thousands of dollars over time? Spend one day a year re-evaluating your insurance policies.

At that time, examine your homeowners, auto and life insurance policies to make sure you're still getting a great deal relative to your coverage levels.

If that sounds dull, imagine a trip to a Caribbean beach you paid for with money you've shaved off premiums.

Here's what you should look for during your annual insurance checkup:

Homeowners insurance: First, make sure you're adequately covered. Some homeowners make the mistake of covering their house only for the amount they paid. But if you snagged a great deal on your home, you may have bought it for less than the cost to rebuild.

Use a website such as to find the "replacement cost" of your home -- which is the cost of reconstructing your house from scratch at today's prices.

Make sure you have sufficient coverage for your possessions as well. Policies will vary with regard to how much they'll reimburse for damage to your "chattel personal," which is industry-speak for "your stuff." If you own any items of particular value, such as art, antique furniture or jewelry, you may want to buy additional insurance. I once bought insurance to specifically cover a high-performance bicycle.

Auto insurance: Did you finance your car? Many lenders require you to carry comprehensive and collision coverage for the vehicle's purchase price until your loan is fully paid. Once your car is very old and not worth much, consider dropping comprehensive and collision.

Auto insurance companies are introducing new products and services that reward good driving habits. Progressive, for example, rolled out a Snapshot program in which an electronic device in your car offers a personalized insurance rate based on your driving habits. This service didn't exist five years ago -- and it's just one example of how insurance companies are rolling out new technologies that could potentially lower your rate.

Life insurance: Perhaps you bought life insurance for yourself or a loved one five years ago. Back then, both you and your spouse worked, you only had one child and your mortgage balance was $150,000.

But in the intervening years, you (or your spouse) left the workforce, causing the family to rely on one income. You had another child. You also bought a larger house, increasing your mortgage balance to $250,000.

You can see why there would be need to adjust your life insurance accordingly. Among other things, make sure your life insurance adequately covers the cost of hiring people to perform tasks that the deceased previously did.

Paula Pant blogs at about creating wealth and living life on your own terms. She's traveled to nearly 30 countries, owns five rental properties and owes her great life to strong money-management principles. Follow Paula on Twitter @AffordAnything.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
November 06, 2012 at 4:36 pm

@ Sue- I agree that you should review your coverage thoroughly. What you are saying about less is not always better doesn't make sense to me though. Obviously, you should compare apples to apples on this. Are we reading the same article?

I have noticed that there is a huge variability in insurance rates. When I bought my house back in 2001, I really didn't know much about insurance and how it all worked. So I just went with what the realtors and closers reccomended. Well guess what? It's all money and there is a racket going on with insurance agents and realtor scratching each other's backs. You would like to think it doesn't happen, but it does. It's just self interest. And the only way you are going to avoid getting bent over a barrel is by comparing rates and services. I'm smarter now and would never just go with what some agent reccomends.

So, yeah, it's a really good idea to look at what you are buying "on subscription" every year to see if you are getting a good deal or not. If you argue with that common sense, you are just ignorant.

I heard a story on NPR the other day about how people were underinsured when a fire happened in I think it was California or something. THe woman hadn't looked at her policy in years and guess what? She wasn't fully covered when her house was destroyed.

This is good advice. The thousands that you save may not just be from premiums- they may be from NOT having uninsured losses as well.

November 06, 2012 at 3:58 pm

I did read the article, but less is not always better coverage. Not all policies are created equal. Even though coverage limits may reflect "the cost to rebuild", where does that number come from. Does it include the cost to remove debris and increased cost of construction due to building codes, etc. Better look at more than just the limit. Call me a troll, but I am a licensed agent. Too bad consumers take advise from a gecko.