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How are Insurance Discounts Calculated?

Ways to Reduce Your Home and Auto Insurance Costs: 

While most people realize that insurance premiums are calculated by incorporating different inputs and weightings, many don’t realize that insurance companies can vary in terms of how they approach calculating a premium. For example, Progressive Auto Insurance uses 87 different inputs in their premium calculations. These inputs are then tallied up to determine your premium.  Additionally, if you package your insurance, you may be eligible for additional discounts.  It’s hard for individuals to track the metrics for each insurance, so please reach out if you have specific questions on your policy.  

As you consider your insurance options, here are a few things you can pay attention to when shopping for insurance that could help increase your chances of a discount:  

Your Roof, It's Age and Homeowner's Insurance

Due to the increase in hail damage to properties in Colorado, the age of your roof impacts the cost you pay for insurance.  Ask your insurance agent what year is input in your homeowner’s policy to make sure yours is up-to-date.  If you filed a claim when your roof was updated the insurance system does not automatically update and your homeowner’s policy may need to be updated still.

Quality of the Shingles

Some insurance companies provide an additional discount if your shingles are rated as grade or class 4. This is the highest rated shingle and is considered to be hail resistant.  If you have a grade 4 shingle or are going to upgrade, you will need to provide proof to the insurance company that the shingles were installed to receive the discount, so be sure the contractor documents the upgrade for you.

Is a Water Leak Detector Worth It?

As a newer home gadget, water leak detectors are becoming more popular.  The device attaches to your main water line.  Using an app, it monitors your household water habits measuring for various factors such as time of day, purpose and consumption.   Many of the monitors have a vacation setting that will notify you if any water is being used while you’re away.  There are several options out there with different levels of complexity and features.   Note that some devices need to be professionally installed to the waterline, which would be an additional expense.  

Water damage is one of the most common homeowner’s insurance claims and these devices have proved to reduce the number of times water damages a home and the amount of damage that is done.  If you want to better control your water usage and help prevent potential damage from a water leak here are 2 popular brands:  Flo by Moen and StreamLabs.  Again, the insurance company will need proof that the device was installed, so be sure to ask for that.

Will a Home Security System Lower your Premiums?

Most professionally monitored security systems will reduce your premiums.  These types of systems have a staff that monitors your case and can alert authorities if you are unavailable.  While some insurance companies may offer a discount if you have a self-monitored home security system, be aware that most companies do not offer discounts unless you have professional monitoring.  I often get asked if a Ring doorbell system qualifies for a discount, unfortunately it does not.  

How Does and Updated Heating System or Completely Updated Plumbing or Electrical Affect my Premiums?

Reduced insurance costs for these home updates are treated very differently by each insurance company depending on the type and the extent of an upgrade.  Generally speaking, plumbing or electrical updates can reduce your insurance costs when doing a complete renovation.  Often, the entire home needs to be replaced, including behind the drywall.  Just replacing a bathroom sink or drain line will not impact your insurance costs.   Additionally, if you are purchasing a home, it is important to consider the age of the heating system as many insurance companies will not insure a home with a system that is over 35 years old.   Updating an old heating system could give you more insurance options.

I’m happy to review these cases with you, so please be sure to reach out if you have questions.  

My Insurance Company Wants to Monitor My Driving, is it Worth It?

Telematics is a way to reduce your auto insurance by having the insurance company measure your driving behavior with a phone app or device added to your car.  All insurance companies offer a telematics program, but with different approaches on the discount amount and length, metrics measured while driving, and the length of time that your driving is measured.  This is a great way to lower costs for more cautious drivers.

In addition to telematics, some insurance companies are now providing auto insurance where you pay by mile.   The same technology is used but is used to track the miles you drive each day.  At the end of the month you are then sent a bill for the number of miles you drove.

Obviously, the costs of most of these outweigh the cost savings you will receive on your insurance.   I just figure, every little bit helps.   Also, the homeowner’s policy savings are not automatically applied, so make sure your information is updated.  If you think you qualify for one of the items listed above but are unsure if it is included on your policy, please reach out.  

I've also outlined my suggestions for additional steps to take to improve your insurance rates and experience.

To your financial success,

Brad Christian