Insurance Quotes & Advice

Many Americans are overpaying for home and car insurance and don’t even know it.  It is important to review your policies at least once a year.  Here are a few things that anyone can do to help save money on their insurance.

Compare prices

Property and auto insurance rates have been on the decline recently, so it might be good time to shop around and see if you can’t get a better deal somewhere else.

Purchase the proper amount of coverage

For homeowner’s insurance especially it is important to get an accurate value to what you are insuring and the amount of coverage you actually need.  Instead of using property value as the basis for coverage amounts you should use the estimated replacement or reconstruction costs.  With housing prices in a sharp decline, some people may actually be under insured.

Increase your deductible

It can increase what you pay for an incident but it can significantly lower the cost of your premiums.

Use a single insurer

In some cases it may be cheaper to get both types of coverage from a single insurer.  Check to see which companies offer package deals.

Look for discounts

Many companies offer discounts for a variety of different reasons.  For instance, a company may offer government employees a special discount. Make sure you receive any that you might be entitled to.

With the tax deadline fast approaching many recent  home buyers may not be aware that premiums for private mortgage insurance(PMI) paid in 2007 are tax deductible as mortgage interest.  It was included as a provision in the Tax Relief and Health Care Act of 2006.

Banks would normally require home buyers to purchase private mortgage insurance, when they have less than a 20% for an initial down payment.  The tax change was primarily approved as a way to help out mortgage insurance companies, who were losing out on business because it was cheaper for most people to take out piggyback loans.

People were avoiding the PMI by basically taking out two mortgages, one for 80% and another for the remainder.  Since the interest payments for both mortgages were tax deductible, it was usually a cheaper alternative to the PMI which could be quite expensive depending of the credit rating of the borrower and the amount of the initial down payment.

After the changes took effect the purchase of PMI became viable again because the piggy backed mortgage would normally have a much higher interest rate than the primary mortgage.  Although housing prices have fallen sharply many families are still unable to afford the regular 20% down mortgage so the tax changes benefits a significant number of lower income households.

Unfortunately anyone that purchased a home prior to 2007 won’t qualify for the deduction unless they had refinanced their mortgage last year.  Also, only those households with an adjusted gross income of $100,000 or less qualify for the full deduction.

While the tax break was initially to last only a year the deduction was extended for three more years in the Mortgage Forgiveness Debt Relief Act of 2007.

The facts are that flood damage can happen no matter what state you live in.  Even in the highest risk areas, only a small percentage of homeowners purchase flood coverage.  Many Americans have left themselves wide open to heavy losses with little to no recourse.

It’s estimated that about 30% of Americans still mistakenly believe that flooding is covered under their regular homeowner’s policy.  Heavy rains in the Midwest have brought flood insurance back into the spotlight.

Since insurance companies don’t typically offer this kind of coverage the government has had to step in and become the “insurer of last resort”.  In 1968, Congress established the National Flood Insurance Program(NFIP) which is under the direction of the Federal Emergency Management Agency(FEMA).

The program offers flood coverage to residents in communities that follow FEMA guidelines for floodplain management and damage mitigation.  Annual premiums are normally in the $400-$500 range for a median priced home.  While regular insurance carriers don’t offer the coverage itself many of them have entered into agreements with the program to accept payments for the flood coverage and maybe able to offer you some advice.

The program is often criticized because it encourages people to build and reside in flood prone areas.  Nonetheless if you live in these areas currently, you should take advantage of it.

Since it’s a federal run program, premiums are artificially low.  If private companies were to offer flood insurance, rates would be much higher.