U.S. consumers have considered reducing or even dropping their insurance coverage as they look to cut costs amid economic pressures, a recent survey said.
As a result, consumers have cut back on spending in several areas, including 38% who said they are eating out less frequently and 32% who said they are buying cheaper products than those they typically use. More than half (56%) said they also looked for ways to save on their auto and homeowners insurance policies.
"Cutting insurance coverage to save money is a short-term fix that can lead to long-term financial issues if something were to happen," Beth Riczko, Nationwide's president of property and casualty personal lines, said. "Consumers looking for ways to save money should speak with their insurance agent to ensure their policy can best suit their current needs to protect them from any unexpected problems."
If you are looking for ways to save on your home or auto insurance, comparing multiple insurance companies can also help you find the best rate. You can visit Credible to shop around and find the best option for you.
Consumers brace for an economic downturn
Seventy-one percent of Americans are worried about a possible recession and economic downturn in the U.S., Nationwide's survey said. More than half (54%) also said that inflation and rising living costs had a negative impact on their mental health.
The latest Consumer Price Index (CPI), a measure of inflation, rose 8.2% annually in September, slightly less than the 8.3% increase in August, according to the Bureau of Labor Statistics (BLS). The report also showed that costs for shelter, food and medical care increased in September.
Home insurance rates rose 12.1% annually in May compared to a year ago, according to Policygenius. And the cost of car insurance increased 19% annually in September, according to figures reported by ConsumerAffairs.
"Consumers are understandably feeling financially vulnerable due to escalating economic pressures," Nationwide's Senior Economist Ben Ayers said. "And they lack a clear understanding of how they can best prepare and brace for continued financial instability."
If you're looking to lower your insurance costs, you can visit Credible to compare premiums across multiple insurance companies and find the best option for you.
What insurance factors to consider
Many Americans have considered cutting back on insurance to help save money without realizing that it "may result in greater financial loss in the future," Nationwide said. In terms of insurance protection, the company recommended that consumers consider the following factors:
Insure your property to market value
Consumers should make sure that their policy coverage is keeping pace with rising home values, according to Nationwide. Two in three homes are currently estimated to be underinsured by an average of 27%, the company said.
"What used to cost $300,000 to rebuild could cost $350,000 today," Jarett Dunbar, a Nationwide spokesperson, said. "Because of this, customers may be underinsured, potentially leaving them vulnerable in the event of a loss."
Bundle homeowners and auto insurance for savings
To have an insurance bundle, a policyholder must have more than one type of policy with the same insurance provider. Combining home and auto insurance plans could give policyholders a discount.
Data-sharing devices may help to earn discounts
Usage-based insurance allows consumers' premiums to be based on how much or how safe they drive. Companies calculate this by monitoring the driver's behavior, either through a mobile app or a device installed in the vehicle.
For example, drivers can save an average of 20% off their insurance by installing connected devices, smartphones or an auto manufacturer mobile app to monitor and report details about driving habits, according to Policygenius.
Some insurance policies may offer safe driver discounts through telematics options or based on your driving record, while others provide discounts for young drivers. To help you find the best insurance rate for your situation, you can visit Credible to compare multiple providers at once and choose the right option for you.
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