In the highly competitive insurance industry, policy premiums and levels of service can vary widely. When you are shopping for homeowners insurance, the time you invest in careful research can result in significant savings. Thorough “homework” can impact premium costs, insurer service and your financial security and peace of mind. The following steps will help you to find reliable home insurance at the best possible premium cost.
Shop around
Beyond recommendations from friends and associates, professional organizations offer reliable information to help you choose a home insurer. Contact your state insurance department and the National Association of Insurance Commissioners www.naic.org for information about the financial strength, typical premiums and consumer complaint background of insurance companies.
Online insurance quote services also can be helpful in providing price ranges and information about major companies. Speak with several insurers to assess their customer service attitude and helpfulness in determining your insurance needs. You will be able to narrow the field to those you feel will serve you with quality service and reasonable premium costs.
Raise your deductibles
Deductibles are the amount you pay toward a loss. In effect, you are self insuring a portion of your home and sharing the risk of loss with your insurer, so increasing your deductibles will reduce the amount of your premiums. In any case you want to be certain you can afford to absorb the higher deductible, if you sustain a loss.
Many insurers recommend at least $500; but doubling that amount can decrease your insurance cost by as much as 25 percent. Even higher deductibles of $5,000, for example can save you more than 35 percent. Also, keep in mind that if you live in areas prone to natural disasters, you may have separate deductibles for specific types of damage. Florida homeowner policies, for example, include higher deductibles for hurricane losses than for losses from other covered perils.
Insurance costs to consider before buying a home
Many home details impact insurance premiums. Foremost is location. From crime rates and fire hydrant location to areas prone to flooding and disaster, premium costs will reflect the risks associated with the location of your home. In fact, floods and earthquakes are not covered under traditional home policies but require separate coverage that can cost $400 or more.
The age of your home is equally important, as newer homes often are built to higher building code standards and have modern electrical and plumbing systems. Some insurers offer new home discounts that can save you as much as 30 percent. Proximity to the coast, rural locations, roof styles and construction materials also affect premiums. Be sure to ask your agent about conditions and features that can impact the cost of your insurance.
Don’t insure land
The market value of your home includes the land on which it is built. Since the land will still be there following a disaster, you should not include land value in determining how much home insurance to purchase.
Increase home security features
Smoke detectors, sprinkler systems, alarms, dead-bolt locks and storm shutters can discount your premiums by as much as 20 percent. Before investing in devices, check with your insurer to learn what systems and features qualify for discounts
Stay with an insurer
Loyalty can pay! Some insurance companies offer discounts based on the length of time you remain a policyholder and the number of policies you have with them. For example, purchasing your home and auto insurance from the same company may decrease your premiums. In all cases, you should periodically compare your current coverage costs with other companies.
Check your policy once a year
To be sure your coverage is adequate, review your policy limits and the value of your possessions on an annual basis. You may have added significant new purchases or increased the size of your home, or you may have eliminated some of your possessions. Particularly if you have purchased endorsements to cover equipment or luxury items that exceed traditional insurance limits, the value may have depreciated enough to eliminate those riders. Your annual review helps you to make sure you are adequately covered without paying for insurance you do not need.
While the insurance business is very competitive, premium costs, service quality and available discounts can vary widely. Taking the time to compare companies and coverages can make a substantial difference in the cost of your home insurance. You will enjoy the peace of mind that comes with knowing you have adequate home insurance and manageable premiums.