The Walters Agency Podcast

Short-Term Cuts, Long-Term Consequences: Smarter Ways To Save On Insurance This Holiday Season

• Timothy Walters • Episode 21

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 Is It A Bad Idea to Cancel/Reduce Coverage During the Holidays to Save Money?

Holiday stress hits hard, and the urge to cut insurance for quick savings can feel tempting. We’ve seen how that story ends, and it’s not with a bigger gift budget. Tim Walters, a licensed agent who’s guided clients since 2012, explains why canceling or reducing coverage during peak travel season is a costly gamble: more cars on the road, more distractions, and higher odds of a claim you’ll have to pay out of pocket. One incident can wipe out months of “savings,” and the damage doesn’t stop there—coverage gaps often trigger higher future rates and extra fees as carriers flag the risk of lapses.

We unpack what insurers actually look for, from continuity of coverage to lapse history, and how those signals shape your insurance score and renewal pricing. You’ll hear practical, real-world examples of accidents during holiday months and why short-term thinking compounds into long-term expense. Then we pivot to smarter tools that protect your wallet without sacrificing protection: telematics programs for individualized discounts, bundling opportunities, overlooked credits like good student discounts, and the unexpected long-term benefit of carrying higher liability limits. If you’re considering deductible changes, we offer a clear framework for deciding whether the out-of-pocket risk truly matches the monthly savings.

By the end, you’ll have a clean checklist to lower costs responsibly: keep continuous coverage, review discounts with your agent, assess telematics honestly, right-size liability limits, and choose deductibles you can actually fund. It’s a steady, strategic plan that improves your risk profile and your rates over time. If you want help tailoring these steps to your situation, call or text 423-417-2070 for a free 20 minute consultation. Subscribe, share with a friend who’s eyeing a holiday policy pause, and leave a review to help more listeners stay covered and stay protected.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

SPEAKER_00:

Welcome to the Walters Agency Podcast, where insurance meets peace of mind. Hosted by licensed insurance agent and owner Timothy Walters, we're here to help families, homeowners, and small business owners throughout East Tennessee protect what matters most. Our mission? Creating win-win-win solutions for insurance. Let's dive in.

SPEAKER_01:

Holiday budgets are always tight, but cutting coverage could cost you more than you think. Here's what to consider. Welcome back, everybody. Skip Mani, co-host slash producer, back in the studio with Timothy Walters, licensed insurance agent and owner of the Walters Agency. Timothy, how's it going?

SPEAKER_02:

Doing well, Skip. How are you doing?

SPEAKER_01:

Doing just fine. Doing just fine. Getting awfully close to the to the holidays, which is shocking to me. I can't believe it's it's it's uh almost the end of the year. But with that, you know, something that comes up every year about this time, I think. Is it a bad idea to cancel or reduce coverage during the holidays to try to save money?

SPEAKER_02:

Yes. We don't have to go any further.

SPEAKER_01:

It is a bad idea. Very, very bad. Yes, it's a bad idea. All right. Well, thanks, Tim. We appreciate your time today.

SPEAKER_02:

Shortest video, right? Um, no, no.

SPEAKER_01:

Does that have have you experienced that before? Have you experienced that before?

SPEAKER_02:

Oh, God, yeah. Yeah, no, that was that was one of the first things I learned uh when I got in this business, um, whenever that was, 2012. Uh, I think I mentioned this before. You know, I came in with State Farm, and our first uh holiday season came really quickly because the office I worked at started in October. So we basically had October and November, uh, and it started in the middle of November, and it was so crazy because people were calling, uh, and they're saying, hey, I want to cancel my insurance. And you know, we just say, Well, uh, okay, great. You know, did you sell the vehicle? Did you go to another company? Say, no, no, I just want to sell, I want to, I want to cancel it and I want to restart it in January. What? And it really was literally because people were like, well, they didn't want to pay their insurance because they were, you know, buying Christmas presents or or or whatever, mainly for that. And uh I get it. I mean, people, unfortunately, you know, they will go into financial stress to meet those uh supposed obligations um instead of the reason for the season, uh, as they used to say. But uh, you know, it really kind of surprised me that so many people would do that. Uh and I learned uh really quickly why it was a bad idea, because we uh over the course of my career I've had several people do that. And we can't stop folks from, you know, canceling their policies, it's it's their policy. Um so we can advise against it, which I always do. Um, but uh, you know, people would have accidents. Like if their automobile insurance uh was canceled and they would have accidents because this time of year, there's more accidents because people are more people are traveling, more people on the roads, people are stressed, people are reckless, people are angry, and you know, accidents happen. And if you have an accident and you've canceled your insurance, you don't have coverage. So if you send somebody to the hospital, you're on the hook for those medical bills. God forbid you kill somebody, you're gonna be on the hook for medical bills, funeral costs, lost wages, bereavement, a lot of stuff. If you damage somebody's property, yeah, you're on the hook for that. And it conversely, if you're if your property is damaged uh and you've canceled that policy, that's all out of your pocket. So you are self-insuring when you cancel your policy. And I've seen that really negatively affect people. Uh, and to do that to save maybe a few hundred bucks over the course of a couple of months, I'm just gonna say it's not smart, it's not responsible, and buying cheap plastic stuff from China to my mind is not justified. Yeah, I'm I'm very I'm very kind of hard line on it these days because I've seen the negative consequences. So yeah, when I say no, emphatically, that means exactly what it says. Do not do it. Uh just don't.

SPEAKER_01:

There you go. There you go. I'm with you, brother. Well, are there hidden risks or penalties that come with canceling a policy temporarily?

SPEAKER_02:

Yeah. Uh it can definitely affect your insurance score. Uh insurance companies look at uh, you know, uh gaps of insurance. Uh I know in in Tennessee, uh, most companies, if you have had a gap of insurance of 30 days or more, there's going to be a penalty for that when you get a new policy, either with the same company if they'll take you back, or uh with uh with a new company, because they're saying, well, this person has an insurance lapse. Uh if they have multiple insurance lapses over a period of time, you know, companies look at that because, you know, frankly, that's not a great risk for them to wrap coverage for somebody who's going to be so flaky about it. You know, they they make money with long-term clients. Okay. Most insurance companies, people don't know this, they usually don't make money on an individual policy for one or two terms, uh, which could be anywhere from one to two years, depending on the type of policy. Um, so when they see that somebody is constantly canceling their insurance and coming back, and that's not a great risk for them. So what they do is to try to keep people from doing that or to avoid taking on that kind of risk, they'll put in, you know, additional fees, uh like for people who are doing that. If you've had a lapse, you know, your rate may be higher, all of which is completely legal. People get mad about it, but you know, it's just a way for the market to uh adjust to that kind of behavior. Um, so yeah, there's absolutely you know, long-term negative consequences outside of you know potential accidents or whatever. Um, it's it's gonna make you pay more for your insurance over time. And I think that's the the big thing is people need to be more long-term uh focused rather than short term. I'm saving saving, quote quote, air quotes. Saving, you know, however much your insurance premium is for a few months, you know, versus, oh well, your overall rates are gonna be, you know, maybe 10% higher, you know, for the next couple of years. Um I mean, there's there's a lot that goes into it. I think it's unfortunate that you know our education system does not educate people about this in high school. They shouldn't be, but they're not. They have to learn uh either by going into the business or like I did. Uh, or unfortunately, they they they end up learning because they're wondering why their rates are so high. And then when I look at people's lapse histories, I'm like, well, you've canceled your insurance three times in the past three years, you know, why? Well, I just didn't want to pay for it. Well, okay, well, that's that's having a negative effect on your current rate. Don't do it. The good thing, okay, I'll be a little bit positive here. The good thing is, okay, it's like everything else. Like you've you've you've had that that behavior in the past, but if you if you don't do that, if you stop doing that and go forward, you pay your insurance, you keep it going, then companies also see that. They'll say, Oh, well, this person, they had a lot of lapses over the last few years, but the last two years, they've had continuous insurance. They pay attention to that too. That does affect that does positively affect your rates over time if you improve that behavior. Just like if you had a lot of accidents and you stop having accidents or speeding tickets or whatever, eventually, you know, if you improve that behavior, it will reflect positively on your insurance rates.

SPEAKER_01:

So are there any other alternatives to save money that you recommend for clients that are trying to cut cost without sacrificing coverage? Is there something you can do with insurance?

SPEAKER_02:

Yeah, I mean, you can always talk, like I said, what I always say, talk to your agent. Um, you know, they're gonna they're gonna be able to look at your policy, they're gonna be able to advise you about any potential discounts that might be available. I do know one thing that most auto insurance companies uh have really rolled out hard in the last uh 10 years is the telemetric programs, uh, which is uh their telemetric programs, they all call them something different. So uh basically it's like an app that you can download onto your phone or maybe a physical device that you install in your vehicle and it transmits data about you know how often you're driving, like how many miles you're driving, speed. They can get pretty granular, actually. They they can uh if people don't like that, they think, you know, well, I don't like being tracked. I get that, but you're looking to ways ways to save money, and insurance companies are trying to give you a more individualized rate. So if you're a good driver, and I always tell people, be honest with yourself. You don't even have to be honest with me about it, but be honest with yourself. Being honest with myself and everybody watching this, I drive fast. I I am a fast driver. I am I think I'm a good driver. I used to drive a delivery truck. Um, but I do like to get where I'm going. So I would not be a great candidate for those telemetric programs. But uh, you know, there's a lot of factors that go into it, but they can save money. That's one. Uh the other thing uh people don't think about, I believe. Again, this is long term. This isn't necessarily, hey, I want to save some money for this Christmas, but if you look at it long term, a lot of companies will give you better rates over time if you have higher liability limits. So a lot of people carry minimum liability limits. Again, that goes back to uh the companies thinking, well, I mean, what kind of client is this going to be long term? So people statistically who carry higher liability limits on their auto insurance tend to have fewer accidents, they tend to stay with companies longer, they tend to pay on time uh more often. So they're considered to be better risk. Companies give better rates for that because it's it's a more attractive client. Uh so you know, if you've been running with minimum insurance for your whole life, talk to your agents. See what would it cost to say bump it up to the next level of protection. And I think if you do that, if you you know, you're gonna pay a little bit more over time, like immediately, right? But over time, over the course of several years, you're probably gonna see better rates uh for future renewals. So that's something people consider. It's not a short-term uh, you know, cost saver. Um, but yeah, talk to your agent. You know, different companies have different discounts. Uh maybe talk to them uh about your household. Like maybe if you have kids and your kids are listed as drivers and they're good students, ask them, hey, has the good student discount been uh applied to my policy? Okay, no. Well, typically all they're gonna need is your kids' uh you know, most recent set of grades showing that they they're hitting like a basically a B average in high school, is what most of them have. So yeah, talk to your agent. Uh, you know, just ask them, hey, you know, are there any discounts that I'm missing out on? You know, can you advise me on that?

SPEAKER_01:

And they'll they'll do it. Good student. Didn't know that. Good student discount. Wow, my kids are all out of school. Dang yeah.

SPEAKER_02:

Well, you you missed the boat, buddy. Did they make good grades?

SPEAKER_01:

They well, some did, some didn't.

SPEAKER_02:

I'm not gonna call anybody out, you know.

SPEAKER_01:

Right, right. Well, what about adjusting deductibles? Could that save you money as well?

SPEAKER_02:

Yeah, I mean, it can. Of course, you know, going with a higher deductible is going to reduce your uh premium. People are surprised though. Uh you kind of have these days, especially, you have to go really high uh to save what I would consider to be a significant amount of money on your premium. Um, and honestly, I don't necessarily think the additional risk that you're taking on with that higher deductible is worth it. Um, so I'll like I'll give you one example. One of my my one of my auto insurance companies will allow us to go up to$2,000 for uh deductible on comprehensive incollision. And pushing it up that high,$2,000, which is a lot of money out of pocket, that is literally like the only way I can really save people a whole lot of money on their monthly premiums when it comes to adjusting their deductibles. There's not a big difference between, say,$500 and$750 or$1,000 pushing it up. Uh it's like I said, there's typically not that much of savings in it. Uh, and then when you push it up to$2,000, then typically there's a little bit more. But again, you're taking on that risk. You're talking, you're going from like$500 out of pocket to$2,000 out of pocket. I mean, heck, I just I just replaced the C V joints in my in my car, and that was$300. And, you know, and that that kind of tapped into my cash reserves. Most people just don't have, you know,$1,500 extra dollars laying in their laying in their desk drawer or whatever to pay out of pocket. So, you know, again, when people are asking me about that, yeah, I'll I'll quote the higher deductibles just to see what it looks like. Most people, when I when I give them the side by side, you know, hey, what's your cost going to be with and without the higher deductible? Most people end up sticking with their current deductibles after I do that for them.

SPEAKER_01:

Well, Timothy, that was incredibly helpful. I learned a lot about discounts I didn't know existed, so I can use some again, but that's okay. And as always, you know, if uh if you got a question, guys, uh for to our listeners and viewers, if you if you got a question, talk to your agent. If you don't have an agent, talk to Timothy Walters.

SPEAKER_02:

Yeah. I'll talk to you. I like to talk.

SPEAKER_01:

Right. All right. Well, incredibly helpful. Tim, thank once again. Thanks for breaking down the risks and the smarter options. And uh we'll we'll catch you in the next episode.

SPEAKER_02:

Awesome, Skip. Thank you.

SPEAKER_00:

That's a wrap on this episode of the Walters Agency Podcast. Ready to find the right coverage for your home, business, or family? Call or text 423-417-2070 for a free 20 minute consultation. Until next time, stay covered, stay protected, and keep winning with the Walters Agency.