3 Ways to Save on Insurance in 2024

Paying for insurance can be expensive -- especially in today's environment. In fact, the cost of a homeowners policy has risen 21% on average compared with the prior year. And in some states, homeowners insurance costs have jumped as much as 68% since 2021. Car insurance costs aren't much better, with the average premium price increasing 17% in the first six months of 2023. Higher repair costs and an increased number of claims are the biggest factors leading to rising rates.

Despite the high costs, it's important to have the right coverage in place from a trusted insurer to avoid financial loss. The good news is, there are ways to save on insurance without compromising on coverage -- even in this unfavorable market.

Just check out these three possible options for reducing insurance costs in 2024. Ideally, they can help to ensure less money ends up coming out of your checking account for insurance premiums in the upcoming year.

1. Shop around for coverage

Shopping around and comparing policy options is key to getting the best price on insurance coverage. Insurance offerings change over time, and as a policyholder's lifestyle changes and they age, they may find that a different carrier offers better premium costs for homeowners or auto insurance coverage. Insurers may also price policies lower for people who shop around, in a process called price optimization.

Over three-quarters of people who shopped around for insurance coverage did end up saving money, and since it only takes a few minutes to get some quotes online, there's no reason not to do this. Just be sure to compare similar policies by confirming that the quotes are for the same level of coverage. The easiest way to do this is to look at the existing policy and make sure the new quotes have the same kinds of protections and the same coverage limits.

Read more: check out our picks for the best car insurance companies

2. Ask about discounts

Asking insurers about discounts is also a great way to save, as there may be opportunities to reduce premium prices that policyholders aren't even aware of. For example, Geico offers discounts of up to 12% for federal employees, and provides membership and employee discounts for people who are members of one of more than 500 different groups. But policyholders may not know they are eligible for discounts if they don't ask.

3. Make sure you have the right deductible

Finally, it's important for every policyholder to make sure they have the right deductible in place. The deductible is the amount the insured has to pay personally before insurance covers the rest of a covered loss.

A policy with a higher deductible is cheaper, although it does mean paying more out of pocket if something goes wrong. Often, though, it makes sense to choose the higher deductible and save the extra money.

For example, say that it costs $150 more per year in premiums to have an auto insurance policy with a $250 deductible versus a $500 deductible.

• If a policyholder opted for the $500 deductible, they would pay $250 more in the event of a covered loss
• However, they pay $12.50 a month less for their insurance.
• If they saved that $12.50, in 20 months they would have $250 in their bank account to pay the extra out-of-pocket costs in the event of a covered incident.

As long as they went more than 20 months without a car accident, they'd be better off with the higher deductible. They'd have the $250 set aside to cover it, and would be able to continue saving the $12.50 on premiums indefinitely.

Policyholders should do the math on this, seeing how much they could save by opting for a higher deductible and estimating whether they're likely to go long enough without a claim to save enough to cover the added costs. It's worth running the numbers for a homeowners insurance policy, too, as a higher deductible also translates to monthly savings here.

By taking these three steps, consumers may be able to reduce their insurance premiums so they can pay less for the coverage they need and keep more money for other financial goals.

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This article was written by Christy Bieber from The Motley Fool and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.