Although often overlooked as a way to save money, having proper homeowners insurance coverage with the right company can lead to big savings. A suitable home policy should protect you against property loss as well as against personal liability claims or lawsuits. By following the steps below, you can rest assured that you are efficiently and effectively covered for both.
Shop Around: As with most anything else, it is important to shop around for your home insurance coverage needs. The differences in prices for the same coverage can vary greatly, but make sure that you are comparing apples to apples. All homeowners insurance policies have different covered risks and exclusions, so you will want to make sure to verify that the home insurance company policies are the same or similar when comparison shopping. Websites such as http://www.insure.com are extremely helpful.
Raise Deductibles: Deductibles are the amount that you must pay on a claim prior to the insurance company beginning to pay. As you raise the deductibles of your current coverage, the amount you pay in premiums will drop. You can gain as much as a 25% savings by raising your deductibles from $500 to $1000. Remember to check your policy to look for specific deductibles on certain claims. There usually are specific events or activities that have separate deductibles. Savings can be increased by raising the deductibles in these areas as well.
Consider Insurance Cost Before Buying A New Home: Before purchasing a new home, it is a good idea to get quotes on home insurance to make sure the home is going to fit into your budget needs. Mortgage companies will, most likely, add the amount of the policy cost directly to your mortgage. Ask the seller and/or your real estate agent what the premiums were for the previous year. In high risk areas like Florida and Texas, being able to correctly insure the property can be the deciding factor to purchase as the lack of insurance company competition in these areas can be a fateful blow to the consumer’s wallet.
Don’t Insure Land: Make sure that your policy does not include land. Rather, it should be in the amount of the replacement cost of your home, land excluded. If you do not know the current replacement cost, you can contact your real estate agent or local homebuilder’s association to get the average square foot price to build in your area. Multiply this number by the square footage of your home to get the insurable amount you want on your policy. Keep in mind that this number will more than likely differ from your purchase price as well as the current market cost of your home.
Increase Home Security: Most insurance companies offer discounts for increased home security. Almost all home insurance companies will deduct 5 – 10% for monitored home security and fire protection. In addition, rates can decrease for having such things as smoke detectors, deadbolts on exterior doors, fire extinguishers, and indoor home sprinkler systems. How far you are from a fire hydrant and whether or not your fire service is volunteer versus professional can also be factors in your rate determination.
Stay with an Insurer: In most cases, the longer you are with a company, the more savings they will offer. In addition, most companies will offer a reduction in rates if you have more than one policy with them. The longer you with a company and make no claims, the more likely you are to see your premiums drop year after year.
Check Your Policy Once A Year: It is a good idea to re-evaluate your coverage once a year. Check over your policy and make sure that you are adequately covered for the upcoming year. Determine if you need any additional coverage for the previous years purchases. It is a good idea to conduct a thorough home inventory should there be any need to file a claim in the future. Verify that the value of the home is still in line with your replacement cost value on your policy. In the event that you have done any home improvements, you may need to adjust the coverage amounts accordingly.
(Cites: The Insurance Information Institute, http://www.iii.org; The National Association of Insurance Commissioners, http://www.naic.org; Federal Citizen Information Center, http://www.pueblo.gsa.gov)