Insurance

Teen Driving Safety: Least and Most Dangerous States

Originally published in CarInsurance.com.

An analysis of states based on safety and insurance cost factors shows that Maryland, New York and Pennsylvania have the safest driving environment for teens, while Montana, North Dakota and Kansas have the worst.

Getting your license is a rite of passage for teens, but that privilege comes with responsibility. As teens get ready for prom season, CarInsurance.com looked at teen driver safety and insurance costs by state to see which states are the safest for teen drivers. We ran the numbers and found that the safest driving environments for teens are in:

  1. Maryland
  2. New York
  3. Pennsylvania
  4. Connecticut
  5. Massachusetts

On the flip side, the states with the worst numbers are:

  1. Montana (51)
  2. North Dakota (50)
  3. Kansas (49)
  4. Wyoming (48)
  5. Alabama (47)

This is the second year that CarInsurance.com performed this analysis. Maryland and Massachusetts are the only states from last year’s top three to again make the top three this year (Massachusetts and Alaska were first and third respectively last year).

Montana and North Dakota are again the bottom two states this year. Last year, Louisiana joined them as third from the bottom.

The analysis comes at a time when the latest numbers from the National Highway Traffic Safety Administration (NHTSA) show an increase in the number of teen driver-related fatal accidents.

The 2015 figures show that young drivers were involved in 1,886 fatal accidents. This is a 9 percent jump from 2014 (1,886 vs. 1,723). Teen drivers were also involved in 14 percent more crashes in 2015, according to the NHTSA.

Despite those sobering figures, young driver fatalities are still much lower than a decade ago. The NHTSA said fatal crashes involving young drivers dropped 43 percent from 2006 to 2015. That’s an encouraging trend despite the alarming 2015 figures.

Most and least safe states for teen drivers

To identify the best and worst states for teen drivers, CarInsurance.com analyzed five teen-driving metrics:

  • Number of teen driver fatalities per 100,000 population
  • Effectiveness of Graduated Driving License (GDL) components
  • Teen drinking and driving rates
  • Teen emailing/texting and driving rates
  • Average annual insurance costs for teen drivers, which is a reflection of the risk level for this driving group

We gave each state a weighted score to determine rankings, with the safest states topping the list and the states with the lowest scores at the bottom.

Maryland topped our list this year as the safest state for teen drivers, after finishing second last year. The state had a low number of teen-related fatal accidents in 2015 (.3 per 100,000 residents) and has some of the strongest GDL laws in the country.

Last year’s safest state, Massachusetts, dropped to fifth place this year. The Bay State continued having one of the lowest teen-related fatal accident rate and strong GDL laws, which helped it to edge out California and Virginia for the No. 5 rank.

The new Centers for Disease Control and Prevention Youth Risk Behavior Surveillance System results about drunk driving and texting while driving were the major differences this year. Massachusetts survey numbers were worse than Maryland’s, which contributed to Massachusetts dropping from the top spot.

On the other side, Montana and North Dakota remained in the bottom two spots. Both states had a high per capita number of fatal accidents involving teens, lacked strong GDL provisions, and experienced poor teen survey results for drinking while driving and texting while driving.

Here is the full list from No. 1 to No. 51. SEE FULL CHART ON ORIGINAL ARTICLE.

Teen driver fatalities numbers on the rise

Despite much better numbers over the past 10 years, motor vehicle crashes are the number one cause of death for 15- to 20-year-olds, according to the National Center for Health Statistics.

Plus, the fatal accidents numbers for 2015 are a concern, but groups like NHTSA are working to move the trend back in the right direction.

“Obtaining a driver’s license is an important milestone in any young person’s life,” says the NHTSA. “It is also a privilege and responsibility that requires commitment from all parties involved. For teens, parents, driving instructors and peers, safety behind the wheel benefits everyone on the road ahead.”

Kara Macek, senior director of communications and programs at the Governors Highway Safety Association,  (GHSA) says some of the reasons behind the increase are an improved economy, so teens have more disposable income, people traveling more, and lower gas prices. Teens using social media and messaging apps behind the wheel also play a large role.

“Since there’s no one reason for the increase, advocates and officials need to take a multi-faceted approach to teen driver safety and look for a variety of solutions,” says Macek.

Older teens in more fatal crashes than younger teens

The GHSA recently released a report called “Mission Not Accomplished: Teen Safe Driving, the Next Chapter” that showed a higher rate of fatal crashes among older teens rather than 16- and 17-year-olds.

The GHSA analyzed fatal crash data from 2005-2014 that involved drivers 15 to 20 years old. Though teen driver involvement in fatal crashes decreased by 48 percent in that time, the report dug deeper into the crash data and found that older teens account for most teen drivers killed during the 10-year period. The top age groups for fatalities were 19-year-olds, 20-year-olds, and 18-year-olds.

Macek says the figures are “alarming, though not altogether unpredictable.”

Here’s one possible reason — limits on GDL provisions. GDL laws ease teens into driving while they mature behind the wheel. The GDL process usually includes a learner’s permit, an intermediate license, which puts limits on driving, and finally a license with full privileges. The limits often restrict nighttime driving or operating a vehicle with other teens in the car.

The GDL laws usually stop at the age of 18, which means older teens have fewer driving restrictions. This could be a factor in the higher percentage of fatal crashes for older teens.

Macek says many teens wait to get their licenses at 18 or 19, which means they don’t have to comply with GDL restrictions — though they’re new drivers.

“As the report shows, one in three teens isn’t licensed by the age 18, which means that when they get their license, they often aren’t going through the graduated driver licensing process and getting the education necessary to learn safe driving skills,” says Macek. “For teens that were licensed at 16 or 17, by the time they’re 18 or 19, they’ve gotten comfortable driving, forgotten some of the training, and are likely to start taking more risks — even though they’re still fairly inexperienced drivers.”

As a way to combat this issue, Macek says the GHSA suggests that all states increase GDL laws for drivers until the age of 21. Only New Jersey has that kind of restriction.

“Expanding GDL would ensure that the vast majority of people getting a driver’s license for the first time have received adequate training and education on safe driving,” she says.

The GHSA is advocating that states strengthen GDL laws to improve driver safety.

“While 18 may be the age of majority in most states, its arrival does not mean a teen driver is now risk-free,” said the GHSA in its report. “It takes time — as much as three to five years — for a teen driver to gain the experience and the maturity needed to advance from being competent and tactical to strategically skilled.”

Graduated license laws 

Both the GHSA and NHTSA agree that GDL laws have played a key role in reducing fatal accidents involving teens over the past decade.

“For the most part, GDL is the most effective countermeasure we have seen that contributed to the decline in teen driver fatalities,” says Macek.

States devise their own GDL system, so there are great variations between states. States with the strongest GDL laws have seen the highest reduction in fatal-related crashes, according to the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI).

According to IIHS, 13 states could sharply reduce fatal crash rates among 15- to 17-year-olds if they adopted the five strongest GDL provisions. The five states that could reduce teen fatal crash rates the most with more effective GDL laws are:

  • South Dakota — 63 percent
  • North Dakota — 56 percent
  • Iowa — 55 percent
  • Montana — 53 percent
  • Arkansas — 50 percent

To find how your state fares for effective GDL laws, see the map below; hover on your state to see the numbers, as well as each state’s teen fatal stats, compared to the national average. 

GO TO ORIGINAL POST TO SEE MAP

Drunken driving

Drunken driving leads to more accidents, and it’s a problem among teens even though they are not at the legal drinking age yet.

GHSA estimates that 10 percent of young teens and 20 percent of older teens involved in fatal crashes had blood alcohol levels of .01 percent of higher. This is especially a problem for males. GHSA said male teens were twice as lightly to have a blood alcohol level of .08 percent than teen females. Teen males are also less likely to wear a seatbelt.

“Teen males can be a hard group to reach, but the report cites evidence that one of the best ways to message this audience is through key influencers like musicians and athletes,” says Macek.

Here’s how states rank regarding percentage of high school students age 16 and over who reported drinking and driving in a Centers for Disease Control and Prevention survey.

GO TO ORIGINAL POST FOR DATA

Texting and driving

While drunken driving and seatbelt use are a bigger issue for male teens, female teens are more apt to drive while being distracted. This could include using a cell phone, texting, or talking to other people in the car.

“Getting teens to stop driving distracted is part of a larger cultural shift that needs to happen to get people to put their phones down and focus on driving,” says Macek.

Macek says one way to reduce distracted teen drivers is for parents not to text or use their cell phones when driving. Teens mimic parent behavior.

“NHTSA believes learning safe driving habits can also be derived from observation and parental involvement. A parent being involved in their teen driver’s education can have a lasting effect on their driving habits. Establishing rules and providing input into their driving behavior can better prepare them for situations they will encounter on their own. Surveys have shown that teens whose parents impose driving restrictions and set good examples typically engage in less risky driving and are involved in fewer crashes,” says the NHTSA.

Parents play an important role, but CarInsurance.com found in a survey last year that most of the 500 parents surveyed allowed their kids to break at least one GDL law (59 percent).

Here’s how states rank for percentage of high school students age 16 and over who reported driving and texting or emailing, according to a CDC survey.

SEE ORIGINAL POST FOR DATA

Insurance costs for teens

Insurance companies consider teen drivers as high-risk drivers because of their driving inexperience and youth. It can cost thousands of dollars to insure teens. There are factors beyond age, too, including the amount and cost of claims, driving record, and type of car.

Here are how states rank from most to least for insurance costs for teens

SEE ORIGINAL POST FOR DATA

Methodology

For overall ranking, each state was scored from 1 to 5 (1, poor, 2 fair, 3 good, 4 very good, 5 excellent) on each metric. Metrics were weighted as follows: Insurance cost – 10%; Fatal teen crashes – 30%; Leniency of GDL laws – 20%; Teen drinking and driving – 20%; Teen texting and emailing – 20%. Data shown for individual metrics is ranked by raw number. In cases where a state did not participate in federal surveys, the national average was used.

Sources:

Car insurance rates: CarInsurance.com commissioned rates from Quadrant Information Services for six major carriers in 10 ZIP codes in each state for coverage of 100/300/100 with a $500 deductible for ages 16, 17, 18 and 19.

Fatal crashes: Teen driver fatalities from the National Highway Traffic Safety Administration statistics report “Fatalities in Crashes Involving a Young Driver (Ages 15 – 20) by State and Fatality Type; 2015 Fatality Analysis Reporting System” were divided by the 2015 state population. The result was multiplied by 100,000 to get a rate per 100,000 population.

Graduated Driver License specifications and effective licensing provisions: Insurance Institute for Highway Safety/Highway Loss Data Institute; Governor’s Highway Safety Association. GDL laws scored on estimated percent reduction of teen fatal crash rate if stricter laws in place.

High school teens drinking and driving: Centers for Disease Control and Prevention, Youth Risk Behavior Survey 2015.

High school teens texting or emailing while driving: Centers for Disease Control and Prevention, Youth Risk Behavior Survey 2015.

Insurance

High Deductible Health Plans Survey

Originally published on Insurance.com.

Getting the lowest health insurance premiums remains what is most important to Americans when choosing a health insurance plan, according to a survey by Insurance.com.

In hopes of improving health plan satisfaction, health insurance companies and employers have improved health care provider networks, added services and removed obstacles like referrals to specialists in health plans, but most Americans still care most about the cost of health insurance premiums.

Insurance.com commissioned a survey of 1,942 Americans and asked respondents about health care costs and high deductible health plans. The survey found that:

  • 35% of respondents said that low premiums are most important when choosing a health plan.
  • 23% said they chose their plan because of the preferred providers available in the plan.
  • 17% said low deductibles are most important.
  • 13% selected breadth of services as number one.
  • 4% chose not needing a referral, such as in a Preferred Provider Organization (PPO) health plan, as what’s most important.

“The results show that the way a health insurer designs a plan and the network of providers are not as important as cost,” says Les Masterson, managing editor of Insurance.com. “For years, insurance companies and employers have tried to figure out ways to improve health plan designs when, in fact, it still looks like low premiums remains what’s most important to consumers.”

HDHPs: Most cost-effective option

One of the biggest changes to health insurance plan design over the past decade has been the introduction (and subsequent rise) of high deductible health plans. High deductible health plans offer members low premiums, but that comes with the individual having to pick up a greater portion of health care services costs because of the high deductible.

The idea behind HDHPs is to contain health care costs by transferring more of the costs for health care services to the consumer while offsetting it with lower premiums. The cost structure is most beneficial when paired with greater consumer education and a Health Savings Account, in which employers contribute to help the individual pay for the higher deductible.

HDHPs have become popular options for employers and are now second only to PPOs in percentage of Americans enrolled in the health plan. Kaiser Family Foundation said about one-third of health plans are HDHPs in its 2016 Employer Health Benefit Survey.

Our survey found that 37 percent of respondents in the survey have an HDHP, which is slightly more than the figure cited by the Kaiser Family Foundation (29 percent).

Respondents’ reasons for selecting an HDHP:

  • 45% chose an HDHP because it was the most cost-effective option.
  • 37% said it made more sense for their situation.
  • 16% said their employer only gave them an HDHP choice.

HDHPs: Most not saving money

Though many chose an HDHP because of cost, respondents said having an HDHP didn’t actually save them money. In fact, 62 percent said health care costs increased in an HDHP compared to their previous plan. Thirty percent said their health care costs decreased.

A key part of HDHPs is the idea of creating better health care consumers. In fact, HDHPs are often called Consumer Driven Health Plans (CDHPs) because the idea is to educate the health care consumer so he/she can make better health care decisions (and save money in the process). We found HDHPs have mixed results.

Most respondents said they are getting more information from their health insurer (63 percent) and doctors (61 percent) to make them better health care consumers. Sixty percent said they shop around for health care services, which is a positive response for HDHPs.

However, only 41 percent of respondents said they now consider themselves better health care consumers.

HDHPs: Putting off care

Those who question the benefit of HDHPs warn that the higher deductibles could cause people to put off care, which could cause problems down the road both in terms of cost and health.

Likewise, our survey found people with an HDHP are putting off care – 64 percent of respondents said they delayed care because they didn’t want to pay the high deductible.

Masterson says health insurers and employers will need to make sure they are implementing plans and programs that actually don’t cost more money in the long run.

“The bottom line is that people are still looking for the lowest premiums possible, which means HDHPs will continue to be a popular option for those looking to pay the least upfront costs possible. As HDHPs become more prevalent, however, health insurance companies and employers will need to make sure that members aren’t putting off necessary care and then have to pay much more down the road,” he adds.

HDHPs: How high is the deductible?

How high are the deductibles in an HDHP? Most respondents said their deductibles are between $1,501 and $2,000, while 20 percent said it’s more than $2,000, and 8 percent said it’s less than $1,500.

An important piece of an HDHP is its associated HSA, which allows members to contribute pre-tax money to an account that can be used for health care costs. Employers often also contribute to these accounts.

Respondents contribute the following amounts to their HSAs:

  • 38% said they contribute between $1,001 and $2,000 to an HSA annually
  • 30% put in $500-$1,000
  • 14% put it $2,001 to $3,000
  • 5% contribute more than $3,000

Our survey also found that employers are contributing to these accounts:

  • 32% said their employer contributes between $500 and $1,000
  • 31% of respondents’ employers put in between $1,001 and $2,000
  • 16% get nothing
  • 8% get less than $500
  • 3% receive more than $3,000

HDHPs: Mixed survey results

Masterson says there are positives for health insurers and employers in the survey results. Some people realize they are being supplied information to make them better health care consumers – and they are shopping for the most cost-effective health care. The vast majority said they are contributing to an HSA, and their employers are providing money in the HSA to help pay for care.

The downside is that a large percentage said they have put off care because of high deductibles, and they don’t feel like they are any better health care consumers — despite the greater education coming from health insurers and doctors.

“The results are definitely mixed for HDHPs. People feel there is more information out there to help them become better health care consumers, but they still don’t feel it’s helping. They are shopping around more for their health care, which should make health plans and employers happy, but they should also be worried that so many appear to be putting off care because they don’t want to pay the high deductible,” says Masterson.

Methodology

Insurance.com commissioned OP4G to survey nearly 2,000 people nationwide in June 2016. 

Insurance

Hurricanes and Home Insurance Guide

Originally published on Insurance.com.

With peak hurricane season upon us, now is a good time to check your homeowners insurance to make sure you’re properly protected before a friendly-sounding storm hits your area and leaves you with a damaged or destroyed home.

Hurricane season runs from June through November and peaks between August and October. Recent storms have destroyed entire communities along parts of the East Coast and Gulf Coast. Hurricane Katrina in 2005 caused more than $41 billion of damage and destroyed portions of Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee. But it’s not just the south that can get nailed by a powerful hurricane.

Hurricane Sandy racked up nearly $19 billion in damage that stretched from North Carolina all the way up the east coast to Maine in 2012.

Those are the big storms, but it’s not only the major hurricanes that can damage a home. Insurance Information Institute reported there were 11 tropical storms and four hurricanes in the Atlantic basin during the 2015 hurricane season.

Don’t wait until a hurricane is headed your way to look into your home insurance protection. Insurers are not going to allow homeowners to buy new or additional insurance if there is already a hurricane watch so make sure you have the right insurance protection now.

The good news is that most homeowners insurance policies cover for hurricanes except for flood. You’ll need a separate flood insurance policy for flood coverage.

However, if you live in an area prone to hurricanes, such as along the East Coast or Gulf Coast, an insurer may exclude coverage for hurricane damage, such as because of wind damage, in the standard homeowners insurance policy or may limit coverage.

If this is the case, you could shop around to see if other insurers in your area will cover you for hurricane damage. You could also see if your current insurer would add windstorm coverage to your policy.

Hurricane insurance: What does it cover?

There is nothing specifically called “hurricane insurance.” Most standard homeowners policies will cover damage caused by hurricanes except for flood damage. But those who live along the East Coast or Gulf Coast, which is where hurricanes most often occur in the U.S., may need to buy an additional windstorm coverage policy.

You would also need to buy a separate flood insurance policy. A common misconception is that a homeowners policy covers flood damage. It doesn’t. See the flood insurance portion of this page to find out more.

Hurricane insurance deductibles

The vast majority of homeowners who are interested in hurricane insurance live along the East Coast or Gulf Coast – and those 19 coastal states and District of Columbia are also where you’ll find hurricane deductibles.

The 19 states that have hurricane deductibles are:

  • Alabama
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Mississippi
  • New Jersey
  • New York
  • North Carolina
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Texas
  • Virginia

A hurricane deductible is not a flat fee like you normally see for other claims. If your home is damaged in a fire, for instance, you would pay a deductible, such as $500 or $1,000, before your insurer paid for damage.

With a hurricane deductible, insurers base the deductible on a percentage depending on the property’s risk. These percentages often range from 2 to 5 percent of your home’s insured value, but the percentage could reach double digits in hurricane-prone coastal areas, such as Florida.

For the hurricane deductible to kick in, your area must experience a “trigger event,” such as a hurricane warning.

If your home is insured for $200,000 and your hurricane damage deductible is 2 percent, you would need to pay the first $4,000 in damages before the insurance company begins to pay for damage. If that same home has a 4 percent deductible, that would mean you would need to pay $8,000 before your insurer paid for the damage.

The state most associated with hurricanes, Florida, has an annual hurricane deductible. This means you won’t get hit with a deductible for each storm if your home is damaged in multiple storms. Once you meet the hurricane deductible, you will only have your normal home insurance deductible.

You can find out the deductible percentage for storm damages by checking your insurance policy declarations page.

Does renters insurance cover hurricane damage?

If you are renting, don’t count on your landlord’s insurance to cover your personal property. Landlords insurance will cover the physical building, but you will need renters insurance to cover damages to your belongings.

Only 37 percent of renters have renters insurance. Renters insurance pays for damages and theft to your belongings, personal liability coverage and can cover additional living expenses, such as if you can’t live in your home because of damage.

The average cost of renters insurance is $188 in the U.S., but the cost varies greatly by state depending on risk. For instance, Louisiana’s average is $246, while North Dakota is only $113. Fewer natural disasters, like hurricanes, means lower rental insurance premiums.

Unlike homeowners insurance, there is no hurricane deductible for renters. If you need to file a claim, you would need to pay your set deductible, usually $250 or $500, before your insurance company kicks in money.

Flood insurance

Floods are the number one natural disaster in the U.S. with $3.5 billion paid out on flood insurance claims annually from 2005 to 2014. The average flood claim was almost $42,000 between 2010 and 2014, according to the National Flood Insurance Program, which his run by the Federal Emergency Management Agency.

People with homes in flood zones have to purchase flood insurance, but it’s not just “risky” homes that can get flood damage.

In fact, FEMA estimates that about 25 percent of flood insurance claims come from areas that have a low-to-moderate flood risk. So, flood insurance can be an important piece of protection for those not living in flood zones.

Flooding associated with hurricanes is usually not covered in homeowner policies. Homeowners can buy additional flood insurance through a broker or agent or through NFIP.

Flood insurance covers the home, electrical systems, applicances and other building property as well as personal contents. Homeowners and condo owners can insure up to $250,000 for a home and up to $100,000 for contents. Renters can insure up to $100,000 for contents.

Here’s what flood insurance does not cover:

  • Damage from moisture, mildew or mold that the homeowner could have prevented
  • Money and valuable papers
  • Belongings outside a home, including trees, plants, walkways, decks, fences and swimming pools
  • Temporary housing if the home is inhabitable

The average cost for flood insurance is about $700 annually, but if you live in a low- or moderate-risk area, it can cost much less.

NFIP says flood insurance costs for people in low- to moderate-risk areas are:

  • As low as $146 for the most basic coverage for homeowners and condo owners with a max of $425 for the maximum coverage that includes $250,000 for building and $100,000 for contents.
  • As little as $50 a year for $8,000 “contents only” flood insurance for homeowners, condo owners and renters and $226 for $100,000 in “contents only” flood insurance.

If the $250,000/$100,000 coverage limits are not enough, you can buy excess flood insurance from an insurer, but you must have the base NFIP insurance first.

An important thing to know about flood insurance – you can’t wait until a storm is barreling toward you to get flood insurance. Flood insurance usually takes a month to process and you won’t be covered if you wait until a storm is already headed your way.

Wind insurance

Insurers in hurricane-prone states offer additional windstorm or wind/hail deductibles. This works similarly to the hurricane deductibles mentioned above though windstorm insurance is in addition to your regular homeowners policy. III says deductibles usually range from 1 percent to 5 percent of a home’s insured value.

Make sure to review your policy to see if wind damage is excluded in your policy. If it’s excluded, you may want to explore a separate wind insurance policy, which is usually a state insurance program. Each state has different rules and regulations and you don’t want to wait until a storm hits your area. For instance, the state of Texas won’t allow you to buy windstorm coverage if a hurricane is in the Gulf of Mexico.

The cost of windstorm insurance varies by location and risk. The annual average cost for windstorm insurance in coastal Florida is $2,600, while in Texas, it’s about $1,500.

Most wind-related claims are related to roof damage though windstorm insurance covers all exterior parts of homes and can include detached structures like garages and sheds.

One important note – if a tree crashes through your car, windstorm insurance does not cover that damage. That would go through your comprehensive car insurance.

Filing a hurricane insurance claim

You should handle filing an insurance claim related to a hurricane in the same way whether you have a hurricane deductible or not. If you notice damage, don’t wait to notify your insurance company. Take these actions:

  • Document the damage through photos and/or video.
  • Prevent further damage to your home by covering broken windows, for example. Not doing so could cause your insurance company to not pay for further damage caused by not taking the necessary precautions to protect your damaged home.
  • Notify your insurance company immediately so they can begin the claims process.
  • Keep track of your communication with your insurance company, including dates, names, conversations and contact information, but don’t have the permanent repairs done until after your insurer has reviewed the damage.
  • Get repair estimates from qualified contractors in writing.

Having the right level of insurance if a hurricane hits can be key to your financial well-being. Make sure you understand how a hurricane can impact your homeowners insurance and that you are properly protected with flood insurance and windstorm insurance if your property is at risk.

Insurance

Home Insurance Discounts Guide

Originally published by Insurance.com.

Home insurance companies offer discounts that can save you hundreds, but it’s up to you to make sure you’re getting all the homeowners insurance discounts you deserve. That way you can ensure you have sufficient coverage, but at the same time getting the cheapest home insurance for your particular situation.

Bundling insurance, staying with an insurer, renovating your house, adding a security system and setting up automatic billing can all save you money on your home insurance bill.

At the time of a new policy, insurers will likely give you a discount for bundling auto and home insurance or staying with that company for many years. But you will have to notify your insurer about other possible discounts, such as when you add a sprinkler system or new wiring to your house.

Don’t wait for renewal time to tell your insurer. You can start enjoying the benefits of discounts today.

This guide will look at how home insurance discounts work, examples of home insurance discounts that most insurers offer, limits on how much you can save on discounts and other ways to save on your home insurance bill other than discounts.

How do home insurance discounts work?

Similar to car insurance, insurers base your home insurance rates on three factors:

Base rate — This takes into account your risk factors, such as the location and building materials and age of your home.

Surcharges – Surcharges raise your rate. Filing claims lead to surcharges on your home insurance bill, as can having a certain breed of dog or other items that are seen as risky to a home insurer.

Discounts – Discounts help lower your rate. There are various types of discounts available and they vary by state and company. While one insurer may offer you a 10 percent discount for paying your bill in full, another might only give you a 5 percent discount. But every little bit helps, right?

When to ask for home insurance discounts

You don’t have to wait to renew your policy to get discounts. Contact your home insurance company and provide them documentation in cases such as a new roof or security system.

If you have a new policy, look through your insurer’s information for any discounts for which you might be eligible. Don’t be afraid to ask your insurance company if you’re not sure if you’re eligible for a discount.

Here is a list of home insurance discounts that could save you money:

Home and auto bundle

This is one of the biggest discounts you can get. In fact, Travelers gives up to 15 percent to bundle your auto, home, and even an umbrella insurance policy. Allstate claims you can save up to 25 percent on your auto premiums and up to 35 percent off your home premiums when you bundle your policies. Saving on both sides is a big plus to having multiple policies with the same insurance company.

Insurers give generous bundling discounts (also called multi-policy discounts) because you’re giving them more of your business.

An insurer will usually give you the discount when you start your policy or begin bundling multiple types of insurance. If you bundle, make sure you’re getting the discount that you deserve.

Here are average homeowners insurance savings, as a percentage, by state, for bundling home and auto coverage, according to Insurance.com’s homeowners insurance rate analysis of major insurers for nearly every ZIP code in the country. Findings showed a nationwide average savings on home insurance of 20 percent. You can save about 8 percent, on average, on your car insurance when you bundle it with your home coverage.

Home and auto insurance bundle discount by state

Loyalty

If there is something that insurers love more than bundling, it’s loyalty. These types of discounts are often up to 10 percent.

One caveat: You usually have to remain in good standing and many insurers only offer the discount to people who are claims-free for a certain period of time.

Loyalty discounts are great reasons to stay with your insurance company, but that doesn’t mean you shouldn’t shop around. It’s still a good idea to get quotes from other insurers every few years at a minimum.

Your insurer’s 10 percent loyalty discount might pale in comparison to another insurer’s new customer discount and other perks.

New customer

Changing insurance can save you up to 10 percent. Beware: Most insurers only include the discount for a limited period. So, you’ll want to figure out whether the 10 percent discount for two years is worth changing your insurance — and losing any loyalty discount.

Being claims free

Insurance companies don’t like to pay claims. They dislike it so much that you can get as much as 20 percent off your bill from some insurers if you don’t file claims for 10 years. For a lower discount, some insurers are okay with only five years of no claims.

Before filing a claim, it’s always good practice to figure out whether it’s worth it.

Let’s look at an example. Let’s say a leaky roof damaged your ceiling. There is a watermark on the ceiling, but there isn’t any other damage. You have a $1,000 deductible and repairs will cost about that amount.

In this case, it’s best to handle the repairs on your own dime. If you file a claim, you’d have to pay the $1,000 deductible AND your rates will likely increase because you filed a claim.

In this case, you’d wind up paying more for filing a claim than paying for it yourself.

Before filing a claim, you should make sure that you’re not going to actually lose money in the long run because of filing a claim.

Setting up automatic payments

One of the easiest ways to save on your home insurance is by setting up automatic payments. Many credit cards have a similar program.

You allow the company to automatically get paid through your bank account. If you’re comfortable giving your insurer that information, many insurers give a 5 percent discount for setting up automatic payments.

Paid in full

Paying off your annual home insurance bill can get you a discount of about 5 percent.

Insurers like when members pay in full because it means they have their money and won’t have to send more bills. You like it because you won’t have to pay monthly fees — and you can get a discount too.

Early signing

Many insurers offer a discount of about 10 percent if you sign up for a new policy before your current one expires. Insurers would rather you stay with them than shop around. This early signing discount is one way to keep you on board.

Home security

Depending on the security enhancements and type of alarm system, you could get as much as a 20 percent discount. The 20 percent figure is for a high-end central alarm security system that alerts the police of a break-in and includes fire protection.

There are smaller discounts of usually around 5 percent for dead bolt locks and passive burglar alarms that sound, but don’t alert the police directly.

Fire sprinklers and smoke detectors could also get you a small discount so check with your insurance company to see if you’re qualified.

Retirees

Retirees over 55 can enjoy a 10 percent discount. The reasoning is that retirees are more often at home so they will spot a problem earlier than someone who works 9-to-5.

For instance, imagine if a basement pipe bursts and floods the basement one morning. A retiree who spends time at home during the day will likely hear the water flowing and call a plumber — after hopefully turning off the water to the home.

Being home can avert a flooded basement and thousands of dollars’ worth of damage, which is why insurers provide the senior retiree discount.

Technology

New in-home technology protects homeowners from expensive clean-up costs and protects them from disaster.

Take the example about the flooded basement above. There is now technology that actually stops problems immediately.

Active sensors not only sound an alarm, but the latest technology can shut off water or gas when there’s a break. No one has to be home for the technology to kick in.

This kind of technology can come with a hefty price tag, but you can make up part of the cost with an in-home technology discount of as much as 10 percent.

Non-smoker

Do you need another reason to kick the habit? You can actually save money on your home insurance by not smoking.

Improved building materials, fire suppression systems, and fire safety education have led to fewer structure fires, but smoking-related fires and fatalities remain a problem. The National Fire Protection Association reported 90,000 smoking-material fires in the U.S. in 2011. These fires caused $621 million in property damage.

By not smoking, you’ll not only improve your health and save the $7-plus-a-pack you spend on cigarettes, you can get a discount of as much as 15 percent on your home insurance.

New construction and renovations

You can pay less on your insurance by living in a new home or renovating your home.

Improving infrastructure, such as plumbing, wiring or a roof can lead to a discount.

Installing a more durable Class 4 roof or being certified by a Leadership Energy and Environmental Design (LEED) organization as a “green” home could get you up to a 10 percent discount.

Living in a gated community or belonging to a neighborhood watch or homeowners association

A gated community, a neighborhood watch and a homeowners association show insurers that you’re a less risk.

Insurers often give an at least 5 percent discount, but some offer as much as 20 percent off. So, if you fit any of these situations, contact your insurance company.

Married or widowed

Being married or widowed can get a 5 percent discount. Having a spouse means you’re likely more settled than if you’re single. Plus, there is a better chance that someone will be in the house than if you’re single.

Widowed people are usually older and more likely to be at home more too.

Inflation adjustment

You can get a discount if you’re willing to increase your home’s dwelling coverage to reflect an inflation increase. Insurers are then able to raise the coverage of your home in case of inflation.

This lets the insurer keep up with rising costs and home rebuilding costs rather than increase the dwelling coverage at renewal time.

Limits on homeowners insurance discounts

You’ve read about all of the above discounts and you’re adding them up in your head. Now, for the bad news — Insurers usually place limits on the total percentage of discounts you can receive.

This limit is often set at 25 percent. So getting discounts is great, but at the end of the day what you need to look at is the final premium you’ll pay. A company with a lower base premium and fewer discounts may beat out a company that offers many discounts but has a higher overall premium.

How else can you save on home insurance other than discounts?

An easy way to decrease your homeowners’ insurance premiums is to raise your deductible. By simply increasing your deductible from $500 to $1,000, you could save hundreds each year. Our “Homeowners insurance deductibles: How to choose the right one” article provides rates by state and shows the savings earned with a higher deductible.

If you are deciding whether to increase your deductible, make sure you have access to money to pay the deductible if you need work. A good idea is to set aside the deductible amount so you will have that money ready in case you ever need it.

Home insurance discounts are not always automatically applied to policies so it’s a good idea to review your insurer’s discounts now to see whether there are any that would benefit you. And discount and premiums change, so at every renewal, you should check with your insurer to see if there are any new discounts you’re eligible for and also shop around to make sure your insurer is still the best one for your needs.

Insurance

Health Insurance Guide: Which Plan is Right for You?

Originally published on Insurance.com.

Which health insurance plan is best for you?

The answer to that question really depends on a number of factors that pertain to your specific situation. When comparing health plan options, take these factors into account:

  • Your health
  • Your family’s health
  • Your health care providers and whether they accept the insurance
  • Your financial situation
  • Whether you want to pay more upfront via premiums
  • If you want flexibility and not having to ask for referrals to see a specialist

Once you review those factors, choosing a health plan is much easier.

The five most common types of health insurance plans are:

  • Preferred provider organizations (PPOs)
  • Health maintenance organizations (HMOs)
  • High-deductible health plans (HDHPs)
  • Point of service plans (POS)
  • Exclusive provider organization plans (EPO)

The two most common health plans have been generally HMOs and PPOs, but HDHPs have become a lower-cost health insurance option for employers over the past decade. POS and EPO plans are options provided by some employers and health insurers, but they’re not nearly as common as HMOs, PPOs, and HDHPs.

In this guide, we provide information about each of these plans to help you make the right decision for your circumstances. We will go through each of the five plan types and highlight the differences.

What is a PPO?

PPO stands for preferred-provider organization. Premiums and deductibles are usually much higher for a PPO compared to an HMO, but that comes with greater flexibility.

About one-half of enrollees in employer-based health plans are in a PPO. Though it remains the most utilized type of plan, the number has been falling in recent years as employers turn more to HDHPs as a way to contain health care costs.

You usually don’t have to select a PCP in a PPO plan, and you can choose from more healthcare providers than an HMO because PPO networks are usually larger. PPOs allow you to get both in-network and out-of-network care — though out-of-network providers will be covered at a lesser percentage. You can also see a specialist without a referral.

Though a PPO gives you more independence, this doesn’t mean that you have complete access to the health care system without any oversight. A health plan may still require you and a physician to get approval for a costly service, such as an MRI.

In addition to higher premiums, PPOs usually have a deductible that you have to meet before the health plan pays for care.

Kaiser Family Foundation reports the average deductible for an individual PPO plan is $1,028. Once you’ve reached your deductible, your insurer begins to pick up its portion of the coinsurance.

The plans also include an out-of-pocket maximum for in-network care. If you reach your out-of-pocket maximum, all costs are covered by your insurer. A plan’s out-of-pocket maximum can vary widely, so you’ll need to check to see the out-of-pocket maximum for your plan. For Marketplace plans through Obamacare, the maximum out-of-pocket limits for 2017 are $7,150 for an individual plan and $14,300 for a family plan.

The main benefit of a PPO is flexibility, but it does come at the cost of higher premiums and a deductible that you will have to pay before your insurer starts paying for care.

When a PPO might be right for you:

  • You want the flexibility to go out of network and not need to get referrals.
  • Flexibility is more important to you than paying higher premiums.
  • You would rather pay higher premiums, but likely pay less for the health care services.

What kind of person should opt for a PPO: Someone who utilizes health care regularly and sees specialists or wants to have the option to see a specialist without getting a referral.

What is an HMO?

HMO stands for health maintenance organization and makes up about 15 percent of health plans. It is known for its lower premiums and restricted network of doctors and hospitals, which means you sacrifice flexibility for lower upfront costs.

You’ll likely pay less in premiums for an HMO compared to a PPO – sometimes significantly less.

HMOs require that you name a primary care physician (PCP) who “coordinates” care, meaning your primary doctor must refer you first in order to see a specialist. HMOs usually don’t have deductibles (or they are lower than other plans). Instead, you pay copays for office visits, tests, and prescriptions.

One drawback to an HMO is that these plans usually don’t allow you to go outside your network for care. If you do, you’ll need to pay for the care on your own. An exception is if you need emergency care, which requires the facility (but not necessarily the providers) to bill as in network.

Not all providers accept HMOs, so before choosing an HMO, make sure your provider or providers accept the plan.

When an HMO might be right for you:

  • You have a primary care physician and other providers who are in the HMO network.
  • You don’t see many specialists and don’t need referrals often.
  • You don’t mind the limitations of only seeing providers in your network.
  • Cost is more important to you than flexibility.

What kind of person should opt for an HMO:  Someone who wants to pay as little as possible in premiums though not have to face high deductibles. An HMO could be a good option if you have a PCP and your other health care providers are already in the HMO.

What is an HDHP?

HDHP stands for high-deductible health plan, which is also sometimes called a CDHP (consumer driven health plan). HDHPs have grown in popularity as more employers have begun offering the plans as a way to contain health care costs.

Nearly one-third of workers have an HDHP.

Unlike the other plans, an HDHP can vary depending on the specific plan. For instance, one HDHP could be very similar to an HMO, while another could look more like a PPO. The critical piece of an HDHP is the size of the deductible and Health Savings Account that is attached to it.

The deductible is usually higher in an HDHP compared to other plans. The IRS defines an HDHP as any plan with a deductible of at least $1,300 for an individual and $2,600 for a family. You need to pay that amount for care before your health insurance chips in.

The average HDHP deductible is a little more than $2,000, but one-fifth of HDHP plan enrollees have a deductible of more than $3,000, according to the Kaiser Family Foundation.

You’ll want to keep that in mind if you choose this plan, and you should set aside money for the deductible in case you need it.

HDHPs typically feature a Health Savings Account, which allows you to save money pre-tax to pay for qualified medical expenses. Some employers seed money in employee HSA accounts to help pay for care, so you’ll want to see if your employer provides money to employee HSAs when making a health plan decision.

Much like a PPO, your insurer will begin to pay its share of the coinsurance once you’ve reached your deductible. Your insurer will cover all costs once you’ve hit your out-of-pocket maximum.

HDHP usually have lower premiums so they can be a less costly plan option — as long as you don’t need a lot of medical care. HDHPs might be a good idea if you are young and healthy, but could be costly to older adults or young families.

Before deciding on an HDHP, think about your next year of potential health care costs to see whether the lower premiums will more than offset the potential costs of care.

When an HDHP might be right for you:

  • You don’t have many health care costs, and you don’t expect to have many costs over the next year.
  • You’d rather pay less upfront costs in premiums with the understanding that the higher deductible means you’ll pay more out-of-pocket if you need care.
  • You don’t have children and/or a spouse on your plan who may use a lot of health care services.

What kind of person should opt for an HDHP: Someone who is healthy and doesn’t expect to use many health care services within the next year. You want the cheapest premiums and don’t mind having to pay a high deductible if you need a lot of care.

What is a POS?

POS stands for point of service plan and makes up about 10 percent of health plans. POS plans are not nearly as common as PPOs, HDHPs, and HMOs. POS plans are a hybrid of PPO and HMOs. In fact, point of service means that the health care consumer gets to choose whether to use HMO or PPO services each time you see a provider.

POS plans usually have similar rules to HMOs (for instance, you need to choose an in-network physician as your PCP), but you can see an out-of-network physician for a higher fee in a POS plan.

When a POS might be right for you:

  • You have a PCP in the POS plan.
  • You want the flexibility of going out of network like a PPO — and don’t mind paying the higher out-of-pocket fees when you need to go out of network.
  • You’re good at keeping health care receipts. You don’t mind filling out forms and sending in bills for payment if you get care out of network.

What kind of person should opt for a POS: Someone who likes being able to go out of network for care, but also wants a PCP coordinating your care.

What is an EPO?

EPO stands for exclusive provider organization and is a managed care plan that requires you to go to doctors and hospitals in the plan’s network.

You don’t need to choose a PCP or need a referral, so in that sense, it’s similar to a PPO, but you will only receive coverage for providers in your network. Other parts of an EPO plan are similar to an HMO, such as having a limited network of doctors and hospitals. You can’t get care outside the network unless it’s an emergency.

Much like a PPO, you need to get approval from your health plan in order to get what’s deemed as an expensive service.

When an EPO might be right for you:

  • You want the flexibility of a PPO and don’t need a referral as long as you stay in-network.
  • You’re OK having a limited network of doctors and facilities like an HMO.
  • You want a network like an HMO, but don’t want to choose a PCP.

What kind of person should opt for an EPO: Someone who doesn’t mind have a limited number of doctors and facilities and would rather not have to get a referral to see a specialist.

What is the difference between HMO, PPO, HDHP, POS and EPO?

It’s open enrollment season at your job and your employer offers you a choice between the three biggest plan types: HMO, PPO, and HDHP. Which is best? It really depends on your financial and medical situation – and preferences.

For instance, would you rather the flexibility of not having to go to a smaller group of providers in an HMO and don’t mind paying more upfront for your care via premiums? Then, a PPO might be right for you.

Do you not care about having a large network of providers, but paying as little as possible for health care is more important to you? Then, an HMO could be perfect.

Do you not use medical services often and you want a plan that will protect you, but not cost much in terms of upfront premiums? Then, an HDHP could be the direction to go.

Choosing the right health insurance plan is a personal decision and depends on your situation and preferences. Whether you ultimately choose a PPO, HMO, HDHP, POS or EPO, take costs, flexibility, coverage and convenience into account when making that decision.

Type of plan Average deductible* Require PCP? Need referrals? Out of network care
HMO $917 Yes Yes No
PPO $1,028 No No Yes
HDHP $2,199 Varies Varies Varies
POS $1,737 No No Yes, but costlier
EPO NA No No No

*Kaiser Family Foundation, 2016 Employer Health Benefits Survey. Note: The survey did not include the average deductible amount for an EPO.