Friday, March 4, 2016

Miser Mom's $8000 mistake

Almost two decades ago, a year or two after my husband and I got married, two of his bikes were stolen from our back yard, where we'd foolishly left them lying around.  We filed police reports, and then we called the insurance company.   One of the bikes was fairly pricey, and the other bike was really pricey.  We shelled out our $500 deductible, and the insurance company paid for the rest of the replacement cost, upwards of $2000.

Leaving two expensive bikes lying around on the lawn was our $500 mistake.

But ignoring our insurance policy was the bigger mistake.  Whoops.

I know (doesn't everybody who cares about personal finance know?) that it's a good idea to check over insurance policies regularly.  We do that annually, or almost so, with our automobile.  And I also know (ditto for the "everyone who cares about pf") that high-deductible policies make much more financial sense in the long run.  In fact, I make it a mantra of mine to refuse to insure anything I can reasonably pay for myself -- no appliance insurance, no extra car rental insurance, no collision insurance, no "tuition insurance".

So it's just a little embarrassing that I only realized last week that our home insurance policy has been carrying a deductible of only $500.  Dang!  Where in the heck has my head been?

It's not like that fact is buried in some fine print somewhere.  I got my new policy in the mail last week and looked it over, and it says right there on page 2:  "Your deductible is $500.  If you raised it to $1000, you'd save this much.  If you raised it to $5000, you'd save even more."   That's pretty clear, really.

We got on the phone with our insurance folks (who I really like, by the way), and asked to raise our deductible to the max: $5000.  The agent immediately suggested some other easy deductions:  Would we like to go paperless?  There's a discount for that.  Heck, yes! (says the anti-trash-nut in this corner).  Would we be willing to sign up for auto pay? Sure thing!  Added convenience for us, and even lower bills -- a win all around.

All in all, even without switching insurance companies or involving reptiles, this one little phone call reduced our home insurance bill by $500 this year.    If we'd done this 20 years ago when we got married [here, add the standard mumble-mumble about inflation and interest rates mumble], we'd have spent something like $10,000 less on insurance, although we'd have had to pay that $2000 for the bikes ourselves.  In other words, we'd be $8000 richer today if I'd just done this 20 years ago.

All of which is to say,  I sure feel silly about not actually, y'know, reading the first page of my homeowner's policy.  For twenty years.



  1. At least you are willing to learn! Too many won't take the time to learn. Good job!

    1. Yeah, I don't think this is a mistake I'll make again!

  2. DH calls up every 2 or 3 years to check for discounts with our regular providers.

    1. I actually sort of like reading the policies and doing the on-line stuff, but I hate talking on the phone. My husband is just the opposite of me -- so I happily delegate calling to him, and he happily calls. It's a great division of labor!

  3. I actually didn't know that higher deductibles were possible for homeowner's insurance until a couple of years ago when I read about it on a PF blog. (That's not true for flood insurance, though.)

    I'd also like to note that discounts for going paperless and for autopay may not have been available for the whole twenty years.

    And maybe that message was not even on the first page of your insurance papers before. On the other hand, there is often so much useless information that I can see the temptation to not read some of it. By "useless," I mean sentences like "Please read the following documents." and "The following documents are very important."

    1. Yes, you could very well be correct -- paperless truly is becoming a "thing" in a way that it hadn't, and it's entirely possible that my bills are just much more readable now than they had been.

      But I don't know whether these possibilities are actualities, because I hadn't really been looking at our insurance policies! (For the reason you mention -- there's so much pointless verbiage filling them up).

      If someone offered to pay me $500 for spending 10 minutes actually looking at some complicated material, I would have quickly agreed. So why I didn't actually do that before now with my policy? Shrug . . . not much like me, I think, but there it is.

      As with many, many of us. I think this is totally understandable; I appreciate your empathy!