When money is tight, cutting corners on insurance may seem a tempting way to save money.
But dropping needed coverage can be an expensive mistake. Better to shop around, comparing prices and services for the insurance you need - not just during tough times, but always.
"Remember, competition only works if the consumer shops for coverage," emphasize consumer guides you can download for free from the consumer information page of the National Association of Insurance Commissioners Web site, www.naic.org.
"Comparison shopping takes time but it will save you money," says the NAIC, an organization of state regulators. The key, they say, is to know the coverage you need before you start comparing prices.
I consider coverage against potentially catastrophic expenses a must - things such as a major illness or extended disability, seriously injuring other people in an accident, having the house destroyed by a fire or hurricane, or dying prematurely without providing for my family.
I can handle moderate losses on my own and generally choose the highest deductible, saving thousands of dollars in car, homeowners and windstorm insurance premiums over the years.
Insurance needs vary among different people. Through its online "Insure U," accessible from its main Web site, the NAIC provides extensive consumer information on insurance, including home, auto, health and life, based on our stage in life (for example, whether we are single or married, young or old, raising children or grandchildren).
You also can search for consumer information on many subjects, including insurance, at the Web site of the Consumer Federation of America (www.consumerfed.org), a not-for-profit advocacy group. A useful resource geared to insurance is the Insurance Information Institute, www.iii.org. Although the Institute is also not-for-profit, it is supported by the insurance industry and may be considered "pro-insurance." But its site is chock-full of solid information and savings tips.
For example, it may not pay to keep collision and/or comprehensive coverage on older cars worth less than 10 times the annual premium.
Many insurers give you a discount if you buy two or more types of insurance from them.
But don't choose an insurance company on price alone. "It's important to select a company that's financially sound and has a reputation for outstanding customer service," said Jeanne Salvatore, consumer spokesperson for the Institute. Check on any consumer complaint history with your state insurance department and ask friends and business acquaintances for their experiences and recommendations.
The for-profit www.insure.com, an online quote and shopping service, offers consumer tips on many types of insurance, including health care for pets. For "human" health insurance information, particularly if you don't have employer coverage, check www.healthinsurance.com, www.ehealthinsurance.com and www.healthinsurane.com. Among sites devoted to life insurance, I like www.accuquote.com.
"Why wait to save until you are against the wall?" asks Byron Udell, AccuQuote.com's founder and CEO. He estimates 80 percent of people between the ages of 40 and 50 with term life insurance could save money by switching to a newer policy reflecting lower current rates (before canceling an existing policy, always make sure you qualify for a new one).
What if you have a good policy you feel you can no longer afford? Udell suggests switching from annual to quarterly or monthly premiums (even if doing so costs a bit more in the end), shortening the term of the policy (say, from 30 to 20 years) or as a last resort, reducing the death benefit, which is better than canceling coverage completely. If you choose this latter option, reapply for additional coverage immediately once your financial situation improves, Udell recommends.