What Does Halloween Have to Do With Insurance Deductibles?

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During the Halloween season, pranks like an egged car or a broken window from a smashed pumpkin often become more common. If any of these, or another damaging prank, happens to you, you may want to consider whether or not to make a claim on your auto or homeowner’s insurance policy if your home or car suffers some damage due to Halloween tricks. Here’s a guide to help you decide.

Know How Your Deductible Applies to Halloween Prank Damage

Every homeowner’s insurance and car insurance policy comes with a range of deductible amounts from a few hundred dollars to well over $1,000. That deductible is the portion of the cost of the repair or replacement of your damages you must pay before your insurance policy pays the remainder of any claim (and deductibles generally do not apply to the liability portions of your policies), according to the Insurance Information Institute, an industry-funded consumer education organization. A deductible applies each time you file a claim and is “deducted” from your claim amount so you don’t have actually pay the deductible to the insurance company.

“Because of the way deductibles work, it makes sense to be aware of your deductible amounts for each policy,” Michael Barry, vice president of media relations for the Insurance Information Institute, said. “Then, if you experience damages on Halloween, weigh the cost to repair or replace any damage against that deductible amount you’d need to pay out of pocket and whether that would cause your household financial distress.”

Should You File a Claim?

Even though policies generally cover your home and car for accidents, vandalism and theft damages (the category many Halloween pranks fall under), Barry said if you can financially absorb that amount, it’s usually not worth it to make a claim.

Damages to your home or car that may occur on or near Halloween — like toilet-papered trees or smashed pumpkins — can be more of a messy inconvenience than expensive to repair. When it comes to these smaller damages that may cost less than or slightly above the deductible amount to repair, Barry suggested keeping an emergency savings fund to cover these smaller repair costs yourself instead of making a claim on your insurance policy.

Keeping that insurance deductible amount in an emergency fund can help protect you from resorting to a credit card to cover any out-of-pocket damages and from making small claims that could cause premium rate hikes.

But if the damage is much greater than your deductible — such as a Jack O’ Lantern that causes a house fire, eggs on your car that destroy the paint or a serious burglary — that’s when you may want to resort to your insurance to help you with the repair and replacement costs.

When Making a Claim Can Cause a Rate Hike

According to the Department of Motor Vehicles, car insurance rates can go up after you file a claim, although many insurance companies offer “accident forgiveness” as an additional perk so this doesn’t happen because of one accident. Rate hikes are usually reserved for collision claims or claims involving dangerous behaviors (like drunk driving), according to Barry. Either way, you want to be sure it’s worth it to file a claim for damage to your car from Halloween pranks, as making several claims on your auto insurance policy can raise your risk profile. This is something insurers use when it comes time to set your premiums.

When it comes to homeowner’s insurance, Barry said it’s fairly similar to auto insurance. Homeowners who file more claims may be seen as riskier to insure, so it’s important to keep this in mind during your decision process.

“Several damage claims in a short time period such as a year or two could trigger a rate hike, depending on your risk profile, your insurance company and your claims history with the company,” he said.

If you’re considering switching providers, it’s important to know that your claims are only part of what they may look at to determine your rates. Some providers also review at a version of your credit reports, so it’s a good idea to know where yours stand before shopping around. You can see an overview of your free credit report, updated every 14 days, on Credit.com.

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9 Foolproof Ways to Save on Homeowners Insurance

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Homeowners insurance is one of those things most of us rarely think about. It’s easy to put a policy in place and then forget about it — until it’s too late.

But consider this: For most of us, our home is the most valuable thing we will ever own, and it is filled with things that typically take decades to accumulate. The coverage you have on your home should address the value of the building — which changes with upgrades — and the value of belongings you have in your home, especially high-value items like jewelry, antiques and other collectibles.

As we head into summer, and the pace of things slows down a bit, it’s good to take the time to review your homeowners insurance — what it covers and how much you’re paying for it. Sure, it sounds mundane compared with planning a barbecue, but going over your policy may save you a substantial amount of money. And it may even go a long way to restoring some sense of normalcy for you if that barbecue turns into a blaze.

Check out these tips for getting the best deal.

1. Shop Around

As it turns out, it’s easy to find a way to save money on insurance, as the internet makes shopping simple.

Once you have the basics down, take a look at the various policies you can buy. But, like with anything else, you should not jump at the lowest rate simply because it’s the lowest. It may not have everything you need or really be the best value. You may also consider checking with the National Association of Insurance Commissioners to review insurers in your state and check complaints. Their site notes that states often make information available on typical rates charged by major insurers, and many states provide the frequency of consumer complaints by company.

2. Raise Your Deductible

Sure, that can be scary. But the larger the loss you are willing to absorb before the insurance kicks in — in the event of damage — the less your insurance will cost month-to-month. Raising your deductible from $250 to $1,000 could slash your premium by 10-30%. That’s a lot of savings, without a lot of extra risk.

Don’t be surprised if you need extra insurance for certain risks specific to your area. Remember, if you live in a disaster-prone area — think earthquakes or hurricanes — your insurance policy may have a separate deductible for certain kinds of damage.

Afraid that you may not be able to afford the higher amount you’ll pay out-of-pocket in the event of an emergency? Beef up your emergency fund to cover the increase. That way, the money will be there if you need it, and in the meantime, you’ll save a substantial amount of money on premiums.

3. Look Into Discounts on Multiple Policies

If you do live in an area that is prone to earthquakes, floods or other natural disasters, don’t forget to ask for “multiline” discounts. According to the Insurance Information Institute, some companies will reduce the price of your policy by 5-15% if you purchase two or more policies with them. Just make sure that the end result is less expensive than the combined cost of policies from different companies.

4. Know What You’ll Cover

This is often confusing to people: You want sufficient insurance to cover the cost of replacing your home from scratch if the worst happens. But you won’t need to replace the land, so don’t factor that into your insurance. Verify the amount your insurance company says is the replacement cost of your home by multiplying the cost per square foot for a residential building in your area by the number of square feet you have. And don’t forget insurance to replace the contents of your home.

Be careful: It is not unusual for homeowners to underinsure, and this isn’t a place to cut corners.

5. Inquire About Discounts

Although they vary by insurance company, you may qualify for discounts if you:

  • Reside in a home with certain upgrades
  • Have not filed a claim in a specified number of years
  • Don’t allow smoking inside your home

Senior citizens or people associated with certain professional organizations may also be eligible for discounts. You may want to call your insurer to see what discounts could be available to you.

6. Don’t Forget DIY Protection

A number of insurers offer discounts of at least 5% if your home is equipped with a smoke detector, burglar alarm or dead-bolt locks. This amount may increase to 15% or more if your alarm has active monitoring with dispatch capabilities and your home contains a modern sprinkler system, the Insurance Information Institute says. (On a tight budget? Consider these 20 tips to harden your home security for next to nothing.)

7. Get to Know Your Agent

You know how the local mechanics give you extra tips and services because they’ve gotten to know you through the years? And how the barista at your local coffee bar always slips you a few extra coupons? Insurance agents can be the same way. Plus, according to the Insurance Information Institute, your insurance company may provide a 5% discount if you have been with the company for at least 3 to 5 years, and 10% for 6 or more years. Although this incentive is enticing, it is still important to shop around annually to ensure you are getting the best price.

8. Know Your Policy

Be sure that your insurance is sufficient to cover the replacement cost of everything in your house, including valuables that become worth more over time. On the other hand, if you no longer own valuable diamond jewelry or an extensive collection of art, you no longer want to be paying for the extra coverage you had on these items.

This annual review is a good time to make sure your inventory of your possessions, including photos or a video, is up to date and saved somewhere outside your home — in the cloud, for instance. Don’t have an inventory of your possessions? You can read this guide for some tips on creating a home inventory.

9. Keep Your Credit Score Solid

Premiums may be higher or applicants may not be eligible for homeowners coverage if they have poor credit scores. Before you apply, it’s a good idea to review your credit so you have an idea of where you stand. (You can see two of your credit scores for free, updated monthly, on Credit.com.) If you aren’t happy with what you see, you can work to fix your credit by disputing any errors, paying off credit card debt and limiting credit inquiries until you see an improvement in your scores.

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Can I Get a Better Deal if I Bundle My Auto & Home Insurance?

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Nothing can make even the savviest of consumers’ eyes glaze over quite like the phrase “insurance bundling.” And we get it — insurance products and policy details aren’t exactly the most riveting topics. But hang on for a moment because that disinterest can end up costing you a lot of money and create hassles down the line.

In this round of demystifying the insurance industry, we take on more than just auto insurance. We asked The Zebra’s insurance expert (and former agent for a national big-name insurance company), Neil Richardson, to fill us in on the what, why, and how of insurance bundling so you can get through the process as painlessly as possible, all while making sure you’ve got the coverage you need and aren’t overpaying.

Which Types of Insurance Policies Can You Bundle?

Most big-name national insurers — and many smaller regional ones, too — offer their customers the option of combining different insurance policies. Depending on the company and region, auto insurance can be bundled with homeowner’s and life insurance, and customers can add motorcycle insurance, boat insurance or other specialty insurance coverage options.

What’s the Benefit of Bundling?

The biggest reasons to bundle, according to both insurance companies and our expert, Richardson, are convenience and discount incentives. The incentives can often be substantial, and therefore enticing, he says, but in order to really save over a long period of time, consumers need to go into the process aware of the downsides.

The Downsides of Bundling

Unless customers carefully shop for all of their insurance policies by comparing rates both individually and as part of a bundle from a few different insurers (we’ll tell you how to actually do this below), insurance companies are likely to convince consumers of the ease of bundling. Richardson explains that insurance companies know that the more products customers have with them, the less likely they are to switch companies.

There isn’t much incentive to shop around when a customer has bundled policies because if they switch, say, their auto insurance, they’ll lose the discount, and if they switch everything, it becomes very complicated, very quickly. So, insurance companies can increase one policy a little and they know the customer will be unlikely to leave — this process of price optimization is used by some insurers throughout the auto industry, but Richardson says the incentive to run business this way increases with insurance bundling because the consumer is even more driven by inertia.

Another downside: The prospect of simpler bill consolidation from bundling might not play out exactly as planned. Insurance premiums are due each month on the date you opened your policy. So, if you get one policy on the 15th, and then add another a few months or years later on the 3rd, you’ll still have bills due twice a month, even if the insurance is with the same company.

A final downside: third-party lenders. Many insurance companies specializing in one type — say, auto — will give their customers the option of bundling other types of insurance — like homeowner’s or life — but they will sometimes use a third party to underwrite additional policies.

The fact that one part of your bundle is underwritten by another company isn’t a bad thing in and of itself, says Richardson, and reputable insurance companies will use good quality third parties. However, if one part of your bundle is underwritten by a second company, you’ll still need to deal with both companies in the event of a policy claim on both.

Here’s an example: A major weather event causes damage to your house and your car, and though you have a bundle with one company, you’ll be dealing with two different insurers when making your claims and getting your reimbursements, just as you would if your policies weren’t bundled. The only real benefit of bundling in this case, Richardson says, is the policy discount.

Bundling, says Richardson, most often benefits the insurance company, but there are still ways to beat the house.

Smart Bundling

If the convenience of bundling is a big draw — and if you’ve been quoted some deep discounts — bundling might be a good choice, but you’ll want to approach it the right way. A simple rule of thumb: Shop for your most complicated and expensive insurance policy first. If you’re a homeowner, your house is usually the biggest asset and has the most complicated insurance policy. Life insurance is also quite detailed and complicated. Auto insurance is more complicated and expensive than renter’s, so if you’re bundling the two, shop for auto first.

Bundling for Homeowner’s & Car Owners

For people with houses and cars to insure, homeowner’s insurance is almost always the most complicated and most expensive insurance policy they have. Not only is your home likely to be your biggest asset, the process of properly insuring a home can be long and complicated. So if you own a home, start shopping for this one first.

While shopping for homeowner’s insurance, get quotes from several insurers, narrow it down to your top choices, and tell them that you might like to bundle your auto insurance policy into your homeowner’s, and see what kind of discounts you’re offered. Richardson advises also shopping separately for auto insurance and comparing rates: Even with a discount from your homeowner’s insurance company, you might still be better served with an auto insurance policy elsewhere — the savings might be higher, or you might like the coverage better. Usually the discount you’ll receive from bundling homeowner’s and auto insurance isn’t as great as if you compared rates for both and went with the best deal from two separate companies.

Bundling for Car Owners & Renters

If you’re a renter, Richardson advises searching for your auto insurance policy first since between auto and renter’s, auto is usually more complicated and more expensive. Again, if you find a great auto insurance policy, tell your top choices you might like to bundle renter’s, compare rates, and then get some quotes for just renter’s, too.

Benefits from bundling auto and renter’s insurance policies are often worth it, says Richardson, because renter’s insurance is easy to switch. Homeowner’s and auto insurance bundling can still offer benefits, but the customer should be prepared to switch companies if rates increase.

Unbundling the Bundle

It’s frequently during a claim or other unfortunate scenario when customers realize their bundles aren’t actually as beneficial as they thought, Richardson says. Usually people will see an increase in one rate, so they will switch one policy, lose the discount on the other, and then be stuck shopping for two insurance policies. It’s better to get ahead of this by evaluating if bundling is right for you now.

Our best advice when shopping for more than one insurance policy is to look around, with the above tips in mind. Compare as many options as you can, and share quotes with various companies to see if they can offer competitive rates.

Keep in mind, nearly all auto insurance companies use credit data in their evaluations. So before you apply, make sure you know where your credit score stands. You can get started by checking your credit scores, updated monthly, for free on Credit.com.

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