Saving money on insurance

Saving money on insuranceApparently nobody told my insurance company that inflation was under 2% a year. The auto insurance renewal quote I received in July included a 14% hike in the premium. My policy was already expensive to start with (thanks Michigan), so saving money on insurance became high priority. It’s time to go shopping …

Insurance Renewal Offers

Here’s a summary of the original insurance costs compared to renewal policies I received in the summer.

Type Company 2016 2017 Increase
 Auto National General $3,497 $3,975 14%
 Home Safeco $1,559 $1,675 7%
 Total $5,056 $5,650 12%

I originally arranged insurance through an agent related to my employer. Although they’re two different companies for Home and Auto, I was apparently getting a discount for ‘bundling’ policies. The Auto insurance covers two cars and two drivers.

However I also had two claims in the last year which may have increased the premiums too. The first was an auto claim courtesy of Rusty the Wheel. The second was the Michigan Wind Roof Incident in February which lead to the new roof on our house this year.

In fairness to both companies, I have had no complaints with either of them over the last three years I’ve been a customer. Both claims above were handled quickly and easily with prompt payment.

But still, these were large increases and it was time to take some action in order to limit my personal rate of inflation.

The search for new insurance

My search wasn’t very thorough to be honest, but I was happy with the result. I started by reading up on recommended insurance mentioned on the bogleheads forum. The comments lead to Amica Insurance, a company I’d never heard of.

To cut a short story even shorter, I could price my policy without a hard pull to my credit score on the Amica website. Since the results were quite a bit cheaper, I decided to call them up.

They reviewed my online policy quote and suggested some changes. One of which was to add an Umbrella policy since I had very high liability amounts on both my Auto and Home policies. With the umbrella policy I could lower the personal liability on both Home and Auto, and the Umbrella policy would supplement both.

Here’s the official change in pricing as a result of switching.

Type Original Renewal Amica Savings Decrease
Auto $3,975 $3,450 $525 14%
Home $1,675 $1,088 $587 7%
Umbrella $0 $292 -$292
Total $5,650 $4,830 $820 15%

The switch resulted in $820 a year in savings, around $68 a month, with higher coverage. It’s also 5% lower than my old 2016 premium payments. I pay both policies out of my pocket (the home insurance isn’t part of my mortgage escrow) to increase the amount of credit card rewards.

But wait, there’s … dividends?

Amica is a mutual insurance company; when you take out a policy you have the option of becoming a member and being paid a dividend at the end of the term. While officially there’s no guarantee of receiving a dividend payment, the company hasn’t failed to pay out in the last 110 years or so.

The dividend is about 20% of the policy and it’s treated as a policy overpayment so it’s a refund, not income (no tax impact). It can be paid as a check or put towards your premium payments. You can always choose a non-dividend policy (lower monthly payments) but overall the dividend policy is cheapest. Since I’m already saving money and I like to maximize my credit card rewards, I went with the dividend option. This option isn’t available in every state however.

I plan to receive the dividend as a check and invest the money. The payment should be around $950.


If you are shopping for insurance, the JD Power Auto Insurance list and Home Insurance List might be of use. I didn’t spend as much time as I probably should have in comparing quotes but I ended up saving a fair amount anyway.

These savings will be reflected in my 17.5 Budget for the last half of this year which I’m in the process of finishing up. Excluding the dividend payments, the savings are about $20 a month compared to my initial 2017 budget.

Disclaimer: I’m not affiliated with Amica or any insurance company mentioned in this article and receive no compensation from them. There are no affiliate links to Amica, National General or Safeco in this article.

Quote of the Day

There are 30,000 days in your life. When I was 24, I realized I’m almost 9,000 days down. There are no warm-ups, no practice rounds, no reset buttons. Your biggest risk isn’t failing, it’s getting too comfortable. Every day, we’re writing a few more words of a story. I wanted my story to be an adventure and that’s made all the difference.

8 thoughts on “Saving money on insurance”

    1. Hi reckless saving,
      Yeah the state of Michigan is especially bad, about two or three times higher from what I remember in Alabama. A lot of the expense comes from medical costs / personal liability arising from an accident, plus coverage for uninsured drivers. The premium for the cost of replacing the vehicle itself is pretty low.
      £250 for fully comp would be fantastic!
      Thanks for the comment!
      Best wishes,

  1. Div Life –

    Pumped up about this. Fighting for YOUR money and going with the best situation for YOU is what this is all about. Not only are you saving $20 per month, but that fat dividend check will be stellar afterwards as well. I may have to price it out with them as well! Nice article and thanks for sharing this experience.


    1. Thanks Lanny! Yes am definitely looking forward to the check. I made some savings with my cable bill too so will include that in the budget update coming shortly.
      Congrats on the recent DAL purchase – we’re fellow shareholders on that!
      Best wishes,

  2. My electric bill is going up 25% starting next billing cycle. Property tax will increase another 3.9% on October 1. Unfortunately can not price compare with those.

    1. Hi Dave,
      A 25% hike in electricity sucks, a bit like our water bill which went up a lot. We don’t use electricity for heating so our bill’s not too bad; it’s the lowest to date this year in the four years we’ve owned this house, but we do keep the thermostat fairly high in summer.

      Property tax increases are a pain too – mine are usually deferred as I escrow the payment in my mortgage and it takes the mortgage company a while to notice the increase.

      Best wishes,

  3. I often wonder what on earth inflation is measuring. Apparently its very weak in Australia too, yet petrol prices, energy prices, fresh food prices all seem to be much much higher. Healthcare costs are going ballistic… it makes me wonder what on earth is going backwards to balance it all out?!?

    The other sneaky great thing about mutual companies is every now and then they decide to go public and you are issued shares in the IPO! Demutualisation, at least in Australia, has been pretty lucrative 😉

    1. Hi AustralianDividendInvestor,
      I completely agree with you. I suppose some of the key suspects (internet, cable, phone services) aren’t included in the official calculations. I try to focus more on tracking and limiting my own personal inflation and tune out the rest.

      Healthcare costs are increasing here too although my insurance limits out of pocket expenses to $3,500 a year. If I look at the amounts actually charged for a hospital visit, it’s crazy.

      That’s interesting about the demutualization in Australia. Here there seems to be a negative connotation to IPO’s (Wall Street) so there’s likely more resistance to it.

      Best wishes,

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.