Insurance is boring, but studying your policies can save you money

Jul. 20—MENNO — Eric Larson knows people don't like to think about their insurance policies.

And he should know. As the owner of Larson Insurance in Menno, he speaks with his customers on a regular basis about premiums, deductibles and claims.

"Insurance is such a tricky beast. People don't like to think about it," Larson said in a recent interview. "They pay their premium and they never see anything in return. And then when they file a claim, they feel like they haven't gotten the most money out of their insurance policy."

But the more you think about your policies, the better you understand them, Larson said. And once you understand them, you can find ways to make sure you have the coverage you need for your car, home or health needs without overpaying on premiums or getting less than you should when you file a claim.

Larson's business deals in commercial, home, auto, health and life policies, among others, and said there are a number of ways to be mindful of savings while not compromising your coverage.

Most people in South Dakota carry liability insurance on their vehicle, which is required by law by the state. Larson said for those who carry multiple insurance policies beyond just their car insurance, bundling is the first step that will allow you to take advantage of discounts. You can also adjust your deductible.

"First and foremost (is) bundling. Putting your home and auto together. If you're a homeowner or renter, you can qualify for a multi-package discount with your home. That's the first thing I look at," Larson said. "Next would be deductibles. If you're able to take a larger deductible, and you don't have a lot of claims, your premium is going to be lower and you're going to be able to save money that route, as well."

There are also discounts available for insuring multiple automobiles, Larson said. But he also suggested adding an umbrella policy after examining your liability limits.

An umbrella policy is a type of personal liability insurance that covers claims in excess of regular homeowners or auto policy coverage. It covers not just the policy holder, but the policy holder's family or household and is considered an affordable option compared to other kinds of insurance.

"The other thing you can look at is your liability limits. I'm a huge liability person, the more you have the better," he said. "But if you can afford it, maybe take a lower liability limit on your auto policy and then add an umbrella policy which would add liability to your home and auto policy. That's what I usually encourage people to do — to have that umbrella policy."

Larson said he does a considerable amount of business working with farmers, and they can provide a good example of why it is important to check in frequently with your insurance agent to discuss any changes in property or other aspects that could affect their premiums. It can be easy to forget to touch base with your agent when you sell a vehicle or a structure like a grain bin.

He recommends checking in with your agent at least once a year.

"Farmers are a big bulk of my business, and they go to the bank every year to readjust their loan and line of credit, but every time I talk to them, it's like pulling teeth trying to get them to come in and review their liability," Larson said.

Larson notes that life is fluid, and so is the insurance business. Farmers often add and subtract equipment or add new buildings to their operations. With the current high cost of building materials, not having a grain bin property adjusted could lead to the policy holder not receiving the compensation they should if something should happen to the building.

In other cases, he said customers simply forget to adjust their policies when they make changes.

"I've had farmers come in with their policies where I review and go over it line by line, and they have stuff on there that they sold five years ago that they're still paying premiums on," Larson said. "It's just making them aware and encouraging them to be proactive in looking at their policy."

Many South Dakotans have health insurance through their employer, but that may not be an option for everyone, Larson said. While customers can seek out a health insurance policy through traditional methods, the Affordable Care Act can be a good option for those who want to carry coverage.

The cost of health insurance is worth it compared to how hard a serious illness or injury can impact your pocket book. A 2018 United States Census Bureau report indicates that in 2018, 8.5% of people, or 27.5 million, did not have health insurance at any point during the year. The uninsured rate and number of uninsured increased from 7.9% or 25.6 million in 2017.

"If their employer doesn't offer health insurance, look into the Affordable Care Act. You can get it subsidized through the government, and a lot of customers have done that," Larson said. "Anytime you walk into the emergency room, it's $100,000 probably."

While insurance companies of all stripes have ways to make their policies more affordable, being an independent insurance agent allows Larson to find companies with policies that fit particular clients. Having those options allows him to shop around for the best deals and coverage while still providing a local insurance office and agent.

He said that is part of his responsibility as an agent.

"A nice thing about being an independent agent is you have different companies you can look into, so shopping around is definitely an important thing to do. An agent should be proactive," Larson said.

Regardless of where a customer purchases their insurance, Larson said the best way to stay on top of your coverage and what you're paying for it is by staying in regular contact with your agent. That is what they are there for, and speaking from experience, he knows that a conversation with your agent can open you up to new ideas on how best to utilize your insurance policies.

"I just did a review for a customer, and she was highly-adamant that I couldn't save her money," Larson said. "And by the time I was done, I was able to increase her home value, decrease her deductible and decrease her premium by between $500 and $600. So it's definitely worth checking into."

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