When was the last time you compared the rates on your auto and home insurance policies? Unfortunately, policies held over a long period of time that go along with a stellar safety record don’t always translate into lower insurance rates. Even if you think you have a good rate, it’s smart to shop around periodically.

After receiving my April newsletter and trying to follow my advice to keep an umbrella policy, one of my readers contacted his insurer to add coverage. This reader was surprised when his insurer informed him that he did not qualify for an umbrella policy because he did not have enough liability insurance on his auto policy. (Minimum liability insurance, often $500,000, is required to purchase umbrella coverage.) Although this person had owned his policy for eight years, he was unaware that the policy only provided $50,000 of liability coverage. This amount was clearly insufficient for an individual approach and preparation for retirement.

In addition to realizing that they were underinsured, this person discovered that they were also paying excessive premiums. For just $50,000 of auto liability coverage, this person was paying $914 per year. In addition, the individual realized that he was paying $351 per year for the $350,000 of liability coverage he had on his condo.

So, in total, this person was paying $1,265 per year for $50,000 of auto liability coverage and $350,000 of home liability coverage.

This person then talked to an independent insurance agent to increase the auto liability coverage to an amount that would allow them to get an umbrella policy. This was critical as it drastically reduced the individual’s liability exposure, a risk that an individual with accumulated assets clearly should not have. Even better, the individual was able to get dramatically improved rates on her policy. For a total of $1,207 (less than what they were previously paying!), the person was able to get $1,000,000 of auto liability coverage, $350,000 of home liability coverage, and an additional $1,000,000 umbrella policy.

Clearly, it can be beneficial to occasionally review and compare the rates on your insurance policies. People tend to believe that policies that have been held for long periods of time are efficiently priced, but the opposite may be true. If you haven’t verified that you’re adequately insured and haven’t done a cost comparison recently, talk to an independent insurance agent and minimize your exposure with affordable policies.