Beyond the Bundle: Surprising Ways You Can Pay Less for Your Auto & Home Insurance

You usually don't think about your auto or home insurance until something bad happens.

But when you pay attention to what each insurance company has to offer and play consumer advocate, you can save hundreds of dollars a year on your rates or more.

We'll review the biggest discount opportunities, like bundling, but we’ll share the hidden auto insurance discounts and hidden home insurance discounts as well.

Signs You’re Overpaying for Insurance

The latest sign that you’re overpaying for auto insurance is if your mileage has decreased over this past year-plus of the coronavirus pandemic, but your premium has remained the same.

Yes, at least a dozen car insurers did provide refunds, but they were early in the pandemic and short-lived. For example, Allstate, Liberty Mutual, and Safeco did a 15% rebate for two months;  USAA issued a 20% credit on two months of premiums; Farmers gave a 25% reduction for one month, and Nationwide offered a one-time refund of $50 per policy.

But mileage didn’t decrease for most people for only one or two months. As the 2020 Traffic Scorecard from INRIX notes, the United States is currently at 82% of miles driven pre-pandemic. The numbers are even higher for year-to-year trips to downtown, including 66% less in Portland, 54% less in Houston, 48% less in New York, and 34% less in Los Angeles.

Consumer groups such as the Consumer Federation of America and the Center for Economic Justice not only urged car insurance companies to offer refunds, but also to recalculate rates based on reduced mileage.

Typical Signs You’re Overpaying for Car Insurance

Not only were my husband and I driving less because of the pandemic, but I was also driving much less after resigning from an office job to take a work-from-home position a few months before the pandemic.

Besides that being a sign that I was most likely overpaying on car insurance, I also rang the bell on the most typical sign — not checking other insurance companies at renewal time.

I’m embarrassed to admit that, like most people, unless you have a horrendous experience regarding problems with a claim, you tend to live the adage “If it ain’t broke, don’t fix it.”

That philosophy and procrastination kept me with the same insurance company for close to 15 years. We had great customer service for one claim filing and we stuck with the same carrier as a convenient way to transfer our home and auto insurance to a new state when we moved from Massachusetts to South Carolina.

But when I could not get our local agent to respond to repeated attempts to find out about low-mileage discounts, I decided it was time to heed the advice to compare insurance companies.

How To Shop Around and Switch Insurance Companies

Thanks to free online insurance comparison sites, the ability to easily research company ratings and customer ratings online, and digital advancements in the insurance industry in the past decade, it was much easier to switch insurance companies than I had assumed.

A few calls with agents took only 15 minutes each, the agents supplied quotes within 24 hours, we reviewed them and met with our top choice two days later. Within a week, we had better coverage and at lower rates — saving over $700 annually.

Luckily, we had been bundling our insurance for years, so at least we weren’t overpaying on insurance in that regard.

For those unfamiliar with the term “bundling,” it’s another word for multi-policy. If you have a home insurance policy and an auto insurance policy, it’s rare that you’ll get a better deal using two separate insurance carriers. If you bundle, you could save up to 25%. Renters can take advantage of this discount as well.

Typical Signs You’re Overpaying for Home Insurance

Speaking of home insurance, a few signs that you’re overpaying on that mirror the signs for overpaying on car insurance: not comparison shopping, not reviewing your coverage, and not bundling.

If your home insurance premium increases every year and you haven’t made changes that you feel would warrant the hikes — remodeling your kitchen, finishing your attic, adding a backyard deck or a pool — that’s a sign you’re overpaying.

Contact your home insurance agent to ask them to explain the increase, including specifics on how they calculate your Coverage A, which is your dwelling coverage amount. This coverage is for what it would cost your insurer to rebuild your home completely from the ground up if your home is a total loss.

A lot of insurance companies automatically raise the Coverage A amount every year, accounting for inflation and regional changes in the cost of building materials. But it’s something you should keep a check on in case the increases are too aggressive, and you’re paying for home insurance way beyond the value of your home.

How to Save on Auto & Home Insurance

While insurance companies highly tout their bundling discount in their advertising campaigns, and low-mileage discounts are being used more, there are so many more insurance savings opportunities to look into.

Review Your Coverages

It’s not the most exciting thing to do, but read your auto and home insurance policies carefully. See if you still need to keep your existing coverages.

For example, if you’ve paid off your car loan, you no longer have the lender requirement of carrying collision and comprehensive insurance. These coverages are not required by law, so weigh the cost of your policy, including your deductible, against the value of your vehicle to decide if it’s worth keeping the coverage.

Raise Your Deductible

Speaking of your deductible, an option to dropping your collision or comprehensive coverage is raising your deductible. You can save up to 9% in premium costs by raising it from the typical $500 to $1,000, and up to 20% for going up to $2,000. Just make sure you have that extra amount of money in reserve to pay out of pocket so you’re not in trouble in the event of an accident.

You can also look at raising your deductible on your home insurance. Raising it to $1,000 could save you as much as 25%.

Look Into Usage-Based Insurance

Also, if you’re driving less, an option to a low-mileage discount is to eschew the one-size-fits-all coverage and try pay-per-mile insurance.

By way of a mobile app or a plug-in device that tracks and bases your pricing on your mileage, location, and driving behavior, you could discount your insurance by 5% at the lowest and up to 40% at the highest.

Most of the major insurers have adopted usage-based insurance.

Top telematics programs include: 

• Drive Safe and Save (State Farm)

• DriveEasy (Geico)

• Snapshot (Progressive)

• DriveWise and MileWise (Allstate)

• SafePilot (USAA)

• RightTrack and ByMile (Liberty Mutual)

• Signal (Farmers)

• SmartRide and SmartMiles (Nationwide)

• IntelliDrive (Travelers)

• Pay Per Mile (Esurance)

• KnowYourDrive (American Family).

Seek All Qualifying Auto Insurance Discounts

The following is not an exhaustive account of available auto insurance discounts, as the amount and types of discounts vary by company. For example, State Farm offers 19 discounts, while Liberty Mutual has 38. But it gives you a good idea of what to ask for.

Qualify for More Home Insurance Discounts

Here are a half-dozen tips to get a break on your home insurance:

1. Increase your home’s security. Install deadbolts and a home security system to save between 5-20%. Install smoke detectors or a sophisticated system including sprinklers and automatic fire department notification to help reduce rates by as much as 15-20%.

2. Make your home disaster ready. If where you live is prone to experiencing certain natural disasters, adding storm shutters and reinforcing your roof or other items specific to your location could save on insurance costs.

3. Quit smoking. While not all insurance companies take your smoker status into consideration, you can get better rates from the ones that do if you reduce the chance of causing a house fire.

4. Be a loyal customer. Some companies offer 5% while others may offer up to 10-15% for sticking around for three to five years.

5. Pay your bill early and use auto pay. You can save 5-10% by paying your entire bill in full rather than making monthly payments, as well as by setting up automatic payments.

6. Look for other discounts. Membership in AAA or AARP, as well as in certain organizations, in addition to certain occupations and even your homeowners association can get you reduced rates. Be assertive in asking your home insurance agent about all of the discounts you could qualify for.

We hope we’ve opened your eyes to a few ways to lower your insurance rates. By becoming productive about pursuing these tips, you’re helping yourself live your best life on a budget.

About Karen Condor

Karen Condor is an insurance expert and avowed comparison shopper who writes and researches for the auto insurance comparison site, 4AutoInsuranceQuote.com.