When the clock struck midnight and the ball dropped on the first morning of 2013, we all probably had at least one or two resolutions in mind. Perhaps it was to lose weight, quit smoking or simply work harder at our career or relationships. But what resolutions did you make about your insurance?
According to experts and analysts, you can do several things to improve your insurance situation in 2013. Here are eight important suggestions.
Using your cellphone behind the wheel is not only incredibly dangerous, but the insurance implications can be catastrophic. According to Dan Weedin, an insurance and risk management consultant in Seattle, if you’re involved in an at-fault accident and were using a cellphone, it’s just like running a stop light or stop sign and hitting another car.
“In the insurance company’s eyes, that’s a high degree of negligence,” he says, “and your policy is probably not going to be renewed.”
2. Max out your uninsured/underinsured motorist coverage.
According to the nonprofit Insurance Research Council, one of every seven U.S. drivers is uninsured. Given the high likelihood of being struck by someone without coverage, Mike Barry, a spokesman for the nonprofit Insurance Information Institute, says it’s important to buy as much uninsured/underinsured insurance as your policy will allow. According to Barry, the cost difference between $100,000 worth of uninsured/underinsured coverage and $300,000 is about $50 a year.
“It’s the most unadvertised piece of insurance in America,” Barry says. “Policyholders need to … call their agent or broker and ask how they can max out this coverage.”
3. Shop around.
Insurance is a competitive industry, so you should make it a habit to regularly shop for a new policy, says Bob Freitag, a North Carolina-based public adjuster. “I think people are very surprised when they start shopping around and find that they can save quite a bit of money,” he says.
Freitag suggests the New Year is a great time to test the waters and see whether there’s cheaper coverage available.
“You should be shopping for a new insurance carrier annually,” he says. “It takes about an hour to do, and it’s worth it.”
4. Avoid lapsing life insurance.
You may not know it, but your life insurance policy may be running dry — and you don’t want your family to find out after it’s too late. Now is the best time to make sure your policy isn’t about to lapse.
First of all, review your policy carefully and ask your agent to explain all of the fine print until you understand it completely. According to life insurance expert Richard Newman, too many policyholders buy life insurance, file away the paperwork and never look at it again.“People need to think of the policy as an asset that needs to be reviewed on an annual basis,” Newman says.
You also may want to set up automatic billing, as a policy lapse can occur if even just one payment is overlooked. If you have your premium paid monthly through an automatic bank draft, this prevents the premium notice from being lost in the mail or being overlooked.
5. Get under an umbrella.
The standard homeowner’s insurance policy doesn’t cover every risk you and your family may encounter, and you may want to look into an umbrella insurance policy.
According to Frank Darras, an attorney who specializes in insurance, umbrella insurance is designed to give homeowners added liability protection beyond the limits on a typical homeowner’s policy. Depending on the insurance company, Darras says, homeowners can add as much as $5 million in liability protection under some umbrella policies.
Not only do umbrella policies provide an extra level of protection, they also are relatively affordable. For example, Amy Lynn Banek, a spokeswoman for The Hanover, says increasing coverage with a $1 million personal umbrella policy can cost between $100 and $300 a year.
Additional liability risks that may warrant umbrella coverage include large dogs, backyard trampolines, live-in workers and long-term contractors.
6. Make a home inventory.
If you have to file a homeowner’s insurance claim, you want to make sure you know exactly what was lost or damaged. That means you need to take inventory of your household belongings each year.
Darras recommends doing this every New Year’s Day.
“Take a video camera and go through your house room by room, closet by closest, drawer by drawer and document everything,” he says. “And don’t forget the garage and backyard.”
7. Protect your identity.
A new brand of fraud has been cropping up across the country — the theft of Social Security numbers to obtain health insurance. The World Privacy Forum, a nonprofit research group that focuses on helping consumers protect their identities, estimates that as many as 500,000 Americans have been victims of medical identify theft over the past two decades. And the crime is spreading fast, with the Federal Trade Commission receiving almost 19,500 reports of medical ID theft between January 1992 and April 2006.
James Quiggle, a spokesman for the nonprofit Coalition Against Insurance Fraud, says now is the time to make sure your personal information is protected. Never share your social security number with strangers or officials you don’t trust. Also, review the explanation of benefits (EOB) form sent by your health insurance company. It’s on these forms that you might spot medical treatments you never received. Finally, Quiggle says, you should check your medical records and ask your insurance agent for a list of benefits paid through you policy last year.
8. Make changes to your lifestyle.
According to Oklahoma Insurance CommissionerJohn Doak, here are a few changes that could lower your insurance premiums.
By lowering the number on the scale, you can save 5 percent to 15 percent on the cost of life insurance. These savings can apply to new or existing policies.
Generally, health and life insurance companies will require a person to be tobacco-free for 12 months before giving him or her a non-smoker rate. Although many insurance companies may provide a gradual discount program to help with insurance rates for those intending to quit.
Improve your credit
Your credit rating can affect yourauto and home insurance premiums (the extent to which this is a factor varies greatly from state to state, and it’s not legal at all in Hawaii). To improve your credit score, review your credit report for inaccuracies, pay all bills on time and keep credit card balances below 30 percent of your allowed balance.