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Know what you get for free. Many policies will pay for preventive care (like annual physicals) before you meet the deductible, says Kofman. Others will offer wellness features, price breaks on premiums for healthy habits, picking up all or part of the cost of gym memberships or smoking cessation programs. Check the menu to see if there are services you might want.

Examine limits before you buy. A wave of products aimed at cash-strapped consumers sport lower premiums, but also have low limits for what the company will pay out over the life of the policy (in the $5,000 to $10,000 range), says Kofman. Not a smart buy. Look out for annual limits, as well.

By comparison, many job-based policies offer no limits or lifetime limits of $2 million to $5 million.

3. Life and disability income insurance
Know why you’re buying. Many policies advertise an investment component. That can be a great feature if you want to cover escalating premiums as you get older and your income shrinks.

Making smarter buying decisions

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2. Health insurance
3. Life and disability income insurance
4. Home and auto

But don’t look at it as a financial investment, says George Rejda, author of “Principles of Risk Management and Insurance” and professor emeritus at the University of Nebraska.

Instead, view it as a part of your insurance policy. If you want to invest money, do that separately.

Consider disability income insurance. About 6 percent of those who have short-term disability insurance have to tap it, according to the JHA 2006 Disability Fact Book. If something happens and you can’t work for a while, “the economic consequences can be very severe,” says Rejda.

Shop smart. With life insurance, consumers generally don’t shop around, says Rejda. They may look at how much coverage they get for the premium, “but that number is incomplete,” he says.

Instead, he advises consumers to ask for the “interest-adjusted cost” figure. That will include premiums, dividends, cash value and the time value of the money (what it would be at a moderate rate of return if you’d invested it instead). That tells you, says Rejda, what will it will cost to hold the policy over 20 years “based on all the elements of cost.”

4. Home and auto
Make sure you can rebuild from scratch. In the past few years, homeowners already reeling from disasters got some nasty surprises when they discovered they were underinsured.

Four points to consider with home and auto insurance

1. Is your homeowners policy keeping pace with the current value of your home? When you renew your policy each year, be sure to consider what your home is worth and what it would cost to rebuild (or buy a suitable replacement) today.
2. Have you made any improvements to the home? If you add a $50,000 kitchen renovation, increase your coverage to cover it.
3. Extended replacement cost coverage: This will add 20 percent to 50 percent to the amount of coverage you already have in case you have to rebuild, says Hungelmann. When it really comes in handy: If a large area sustains a loss, the price of manpower and supplies will likely increase.
4. Building ordinance coverage: This provides extra coverage so that you can rebuild your home under the current (likely more stringent) building codes. A good bet if your home is more than 10 years old, or if you live in a disaster-prone area that has upgraded its building requirements, says Hungelmann.
Consider local risks. “No matter where you live in the United States, there’s some risk of a natural disaster,” says Chuck Nyce, senior director of knowledge resources for the American Institute of CPCU and the Insurance Institute of America. But there are some things you might be able to do to at least temper your property risks. For coastal properties, it might include things like roof straps or hurricane-resistant windows, he says.

Smart money move: If you’re making modifications to bring down your rates, ask your agent which improvements make the most difference and how much you’ll save.

Making smarter buying decisions

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2. Health insurance
3. Life and disability income insurance
4. Home and auto

Go through your policy with your agent to make sure you’re covered for every aspect of what the local conditions may throw at you. In many cases, that means some pretty specific policies — like windstorm, flood or earthquake coverage.

In addition, be aware of “two perils” clauses in insurance, says Rejda. After Hurricane Katrina, a lot of homeowners discovered that if there were two sources of damage (like windstorm and flood), and they were protected against one and not the other; companies were denying claims.

Investigate flood insurance. Just because your mortgage company didn’t require it, doesn’t mean you don’t need it, says Carolyn Gorman, vice president of the Insurance Information Institute, an industry trade and research organization. Some private companies sell it, but most of the policies are issued through the federal government’s National Flood Insurance Program. You usually buy it through your agent, who will service the policy. Her advice: buy it if you believe there is any chance you might need it.

The downside: The coverage is limited currently to $250,000, she says. While it’s not enough to protect everyone from a total loss, most flood claims average $14,000, Gorman says.

Protect your pipes. Consider sewer and drain backup coverage, says Gorman. It costs about $25 annually. Many people assume it’s included in their homeowners policy, “but it’s not,” she says.

Expand your umbrella. In 2008, “an umbrella is about your best buy in insurance,” says Hungelmann. Umbrellas cover you if you’re sued in a liability issue.

Usually you can get $1 million in coverage for roughly $100 to $200 annually, says Nyce.

Insurance experts used to recommend umbrella policies of $1 million. But with the rising cost of living and steep increases in health care, many now recommend going for $2 million, if you have the assets to justify it. That extra million can run as little as $50 annually, says Gorman.

Include entrepreneurial activities. Running a home-based business or just doing a lot of work from home? Talk with your agent. You may want to pick up additional liability coverage, or increase your contents insurance to cover inventory or equipment, says Hungelmann.

Ask if your homeowners policy covers the dorm. If kids are leaving for college, check to see if their belongings are covered under your existing policy, says Hungelmann. In many cases, they won’t need additional insurance.

If kids are living off campus, beware of co-signing on leases, which could make you financially responsible if there is ever a liability issue, Hungelmann says. Instead, sign a financial guarantee that will obligate you for rent but not make you liable for accidents, injuries and mishaps.

If you’ve already signed? Talk to your agent about extending your liability coverage to a second residence, says Hungelmann. Cost: about $15 annually. And you can use the same move to protect your vacation condo too, he says.

Look at what you’re insuring. With contents coverage, it’s not enough to buy a certain dollar amount. You also have to portion it out in the right way. First, you want replacement value insurance. That means that if you have a loss, you’ll receive enough to buy your lost items new — at today’s prices.

Making smarter buying decisions

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2. Health insurance
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4. Home and auto

In addition, many insurance companies put a limit on the amount they will reimburse you for certain high-dollar items (often things like jewelry, furs, collectibles, art and antiques). So even if you have $100,000 in coverage, if a thief takes $5,000 in jewelry, you may get a check for only a fraction of that amount.

The solution: specific coverage (often called an endorsement, floater or rider) for special items or collections.

Revisit deductibles. How much can you afford to pay today in cash if you have to make a claim? Especially with property insurance, look for that magic area (usually around $500 to $1,000 on homeowners insurance) where taking a higher deductible nets a hefty break in premiums.

“With many insurers, you will see substantial savings going from $250 to $500,” says Nyce. But not so much if you go from $500 to $1,000.

Get a volume discount. Many companies will give you a price break for handling multiple policies. Say, “I’m thinking of bringing this policy over to you. What kind of deal can you give me?” says Gorman.

Adjust your policy for trusts. If you’ve put some of your insured assets into a trust, be sure to adjust your insurance accordingly, says Hungelmann. The items you own are covered, but the items owned by the trust may not be unless you update your policy.

Get driver training. Depending on your state and your insurer, you might be able to take a safe driving course and get a better rate on your premiums. Some companies will also give breaks to students or senior citizens who have completed additional driver training. “It can save you money in the long run,” says Nyce.

Improve your credit. When it comes to home, auto and liability coverage, many insurance companies use credit scores to determine your premiums. While it’s a subject of debate (and some states allow it, while others don’t), the industry maintains that there is a correlation between higher credit scores and fewer claims losses.

So in many cases, “if you can improve your credit score, you can save money on your insurance premiums,” says Nyce.

And if your credit is low, shop for a company that doesn’t use credit scores.

Look at the ‘why’ behind the quote. Insurance modeling — what the company looks at to determine your risk and premiums — is constantly changing, says Nyce. It can also vary from company to company.

Making smarter buying decisions

1. Overall
2. Health insurance
3. Life and disability income insurance
4. Home and auto

While Nyce was shopping his own insurance, he noticed a big difference between the auto quotes from two different insurers. The one included his zip code as part of the local urban area, which raised the premium. With the second, he fell outside what they considered the metro area. The difference: several hundred dollars.

Take inventory. Before you can collect on a claim, you have to submit proof of what you lost. The smartest way to do that is to prepare the list ahead and update it annually.

Go room by room with a video camera. Make a list with photos. Or take advantage of free computer software provided at KnowYourStuff.org, which partners with the Insurance Information Institute. The program walks you through a tour of your home, prompting you to detail what’s in each room; allows you to attach photographs or copies of receipts; and stores results in a secure online location, she says.

When you purchase big-ticket items, keep a copy of the receipts and stash them with your file. Make several copies and keep one away from home.

Having an inventory “makes filing a claim a breeze,” says Gorman. “And you’ll get a better claim.”