CPA Advice for Saving Money On Insurance

The coronavirus has forced millions of people to shelter in place, closing thousands of businesses and leading many to institute work-from-home policies. For an even greater number of small companies — retailers, restaurants and others — this has meant layoffs and job loss.

Regardless of how long the impact of the global pandemic lingers, now is the time to take inventory of your personal finances, in particular your insurance carriers and coverage. As CPAs looking out for your financial well-being, we provide ways to save money on this vital component of your budget.

AUTO INSURANCE

Before the pandemic, the average American worker commuted 16 miles each way to work and the average commute time measured 26.6 minutes. More than 10 million Americans commuted over an hour each way, and another 600,000-plus traveled 90 minutes each way. The average commuter’s cost topped $2,600, while those spending longer on the road paid an even greater price.

Drivers who can adjust their coverage have seen savings as high as 75%. Areas to look for savings include no longer commuting, driving fewer miles, changing collision and comprehensive coverage and furloughing vehicles.

Start by using an online car insurance calculator to estimate your savings. Tools like this empower you to know the discounts you deserve and coverage adjustments you can make. This will prepare you to contact your insurance agent or insurance company and request modifications to your coverage.

HOME/RENTERS’ INSURANCE

Do you have a new routine that now has you running your business from home? If so, do business colleagues, customers or other people related to your business now come to your home? If so, consider increasing your liability insurance. The risk of an accident occurring, for which you are personally liable, is increased. Be sure to protect against that risk with an adequate amount of liability insurance.

To calculate the amount of liability insurance needed, follow these three simple steps:

1. Add up the value of all your assets
2. Add the total of all your debt
3. Subtract the amount of debt you have from the total asset value to get your net worth

Buy liability insurance in an amount greater than your net worth, the amount you calculated in step three above.

HEALTH INSURANCE

Phase II of the coronavirus stimulus plan was signed into law on March 18, 2020. This bill provides for every American to get tested for coronavirus, at no cost. This is independent of whether you have health insurance or the specifics of your health insurance provider’s plan.

However, testing may not be the entire cost. When sick, other tests may be necessary. Also, hospitalization may be necessary. These additional costs will be billed according to the details of your health insurance policy. Be sure to check with your insurance company. The Trump administration has been working with health insurers to cover preventive care related to the coronavirus at no charge to patients.

For uninsured Americans, some states have re-opened the health insurance exchanges, giving people an option to purchase insurance coverage before the exchanges open on the normal cycle this coming November. States that have recently reopened exchanges include Colorado, Connecticut, Maryland, Massachusetts, Nevada, New York, Rhode Island and Washington.

TRAVEL INSURANCE

If you’re cancelling a trip due to coronavirus, don’t expect the travel insurance to pay the cost of the trip. Travel insurance policies typically don’t cover cancellation fees for events that lead to large numbers of cancellations. Event types that are typically that travel insurance doesn’t cover are epidemics, pandemics, war, terrorism and civil unrest.

However, even if the travel insurance company won’t pay cancellation fees, all hope is not lost. Instead, try going back to the company you booked the trip with. Whether you booked through a travel agent or directly with airlines and hotels, there are likely some reasonable options available to you. Many companies serving the travel industry (airlines, hotels, etc.) have waived change fees and often will allow you to reschedule. Many even offer vouchers allowing you to spend an equivalent amount of money on a trip in the future. Be aware, reschedules and vouchers typically have an end date for how long into the future they can be used.

Be sure to check on your cancellation options well in advance of the departure date. The further in advance you provide notification, the more options that are likely to be available.

WHAT YOU NEED TO KNOW WHEN BUYING INSURANCE

Billions of dollars are spent annually advertising to consumers that the price of insurance is the most important factor. This messaging by the industry overlooks the fact that there are significant quality differences in the products and protection offered by insurance companies. Not surprisingly, the companies that do the best job of honoring the promise to protect tend not to be the companies with the largest advertising budgets.

When buying insurance, be sure to check the efficacy of the claims-handling process for companies you are considering. After all, insurance that won’t pay a claim is overpriced, no matter what the cost.

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Source: Forbes