Lower Your Homeowners Insurance Costs
Shop Around
It'll take some time, but could save you a good sum of money. Ask your
friends, check the Yellow Pages or contact your state insurance
department. National Association of Insurance Commissioners has
information to help you choose an insurer in your state, including
complaints. States often make information available on typical rates
charged by major insurers and many states provide the frequency of
consumer complaints by company.
Also check consumer guides, insurance agents, companies and online
insurance quote services. This will give you an idea of price ranges
and tell you which companies have the lowest prices. But don't consider
price alone. The insurer you select should offer a fair price and
deliver the quality service you would expect if you needed assistance
in filing a claim. So in assessing service quality, use the complaint
information cited above and talk to a number of insurers to get a
feeling for the type of service they give. Ask them what they would do
to lower your costs.
Check the financial stability of the companies you are considering with rating companies such as A.M. Best and Standard & Poors and consult consumer magazines. When you've narrowed the field to three insurers, get price quotes.
Raise Your Deductible
Deductibles are the amount of money you have to pay toward a loss
before your insurance company starts to pay a claim, according to the
terms of your policy. The higher your deductible, the more money you
can save on your premiums. Nowadays, most insurance companies recommend
a deductible of at least $500. If you can afford to raise your
deductible to $1,000, you may save as much as 25 percent. Remember, if
you live in a disaster-prone area, your insurance policy may have a
separate deductible for certain kinds of damage. If you live near the
coast in the East, you may have a separate windstorm deductible; if you
live in a state vulnerable to hail storms, you may have a separate
deductible for hail; and if you live in an earthquake-prone area, your
earthquake policy has a deductible.
Dont confuse what you paid for your house with rebuilding costs
The land under your house isn't at risk from theft, windstorm, fire and
the other perils covered in your homeowner's policy. So don't include
its value in deciding how much homeowners insurance to buy. If you do,
you will pay a higher premium than you should
Buy your home and auto policies from the same insurer
Some companies that sell homeowners, auto and liability coverage will
take 5 to 15 percent off your premium if you buy two or more policies
from them. But make certain this combined price is lower than buying
the different coverage's from different companies.
Make your home more disaster resistant
Find out from your insurance agent or company representative what steps
you can take to make your home more resistant to windstorms and other
natural disasters. You may be able to save on your premiums by adding
storm shutters, reinforcing your roof or buying stronger roofing
materials. Older homes can be retrofitted to make them better able to
withstand earthquakes. In addition, consider modernizing your heating,
plumbing and electrical systems to reduce the risk of fire and water
damage.
Improve your home security
You can usually get discounts of at least 5 percent for a smoke
detector, burglar alarm or dead-bolt locks. Some companies offer to cut
your premium by as much as 15 or 20 percent if you install a
sophisticated sprinkler system and a fire and burglar alarm that rings
at the police, fire or other monitoring stations. These systems aren't
cheap and not every system qualifies for a discount. Before you buy
such a system, find out what kind your insurer recommends, how much the
device would cost and how much you'd save on premiums.
Seek out other discounts
Companies offer several types of discounts, but they don't all offer
the same discount or the same amount of discount in all states. For
example, since retired people stay at home more than working people
they are less likely to be burglarized and may spot fires sooner, too.
Retired people also have more time for maintaining their homes. If
you're at least 55 years old and retired, you may qualify for a
discount of up to 10 percent at some companies. Some employers and
professional associations administer group insurance programs that may
offer a better deal than you can get elsewhere.
Maintain a good credit record
Establishing a solid credit history can cut your insurance costs.
Insurers are increasingly using credit information to price homeowner's
insurance policies. In most states, your insurer must advise you of any
adverse action, such as a higher rate, at which time you should verify
the accuracy of the information on which the insurer relied. To protect
your credit standing, pay your bills on time, don't obtain more credit
than you need and keep your credit balances as low as possible. Check
your credit record on a regular basis and have any errors corrected
promptly so that your record remains accurate.
Stay with the same insurer
If you've kept your coverage with a company for several years, you may
receive a special discount for being a long-term policyholder. Some
insurers will reduce their premiums by 5 percent if you stay with them
for three to five years and by 10 percent if you remain a policyholder
for six years or more. But make certain to periodically compare this
price with that of other policies.
Review the limits in your policy and the value of your possessions at least once a year
You want your policy to cover any major purchases or additions to your
home. But you don't want to spend money for coverage you don't need. If
your five-year-old fur coat is no longer worth the $5,000 you paid for
it, you'll want to reduce or cancel your floater (extra insurance for
items whose full value is not covered by standard homeowners policies
such as expensive jewelry, high-end computers and valuable art work)
and pocket the difference
Look for private insurance if you are in a government plan
If you live in a high-risk area -- say, one that is especially
vulnerable to coastal storms, fires, or crime -- and have been buying
your homeowners insurance through a government plan, you should check
with an insurance agent or company representative or contact your state
department of insurance for the names of companies that might be
interested in your business. You may find that there are steps you can
take that would allow you to buy insurance at a lower price in the
private market.
When youre buying a home, consider the cost of homeowners insurance
You may pay less for insurance if you buy a house close to a fire
hydrant or in a community that has a professional rather than a
volunteer fire department. It may also be cheaper if your homes
electrical, heating and plumbing systems are less than 10 years old. If
you live in the East, consider a brick home because it's more wind
resistant. If you live in an earthquake-prone area, look for a wooden
frame house because it is more likely to withstand this type of
disaster. Choosing wisely could cut your premiums by 5 to 15 percent.
Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the
home you are thinking of buying. These reports contain the insurance
claim history of the property and can help you judge some of the
problems the house may have.
Remember that flood insurance and earthquake damage are not covered by
a standard home owner's policy. If you buy a house in a flood-prone
area, you'll have to pay for a flood insurance policy that costs an
average of $400 a year. The Federal Emergency Management Agency
provides useful information on flood insurance on its Web site at
www.fema.gov/nfip. A separate earthquake policy is available from most
insurance companies. The cost of the coverage will depend on the
likelihood of earthquakes in your area. In California the California
Earthquake Authority (www.earthquakeauthority.com) provides this
coverage.
If you have questions about insurance for any of your possessions, be
sure to ask your agent or company representative when you're shopping
around for a policy. For example, if you run a business out of your
home, be sure to discuss coverage for that business. Most homeowner's
policies cover business equipment in the home, but only up to $2,500
and they offer no business liability insurance. Although you want to
lower your homeowners insurance cost, you also want to make certain you
have all the coverage you need.
