Get the Coverage You Need Without Paying More Than You Should
- Raise Your Homeowner's Insurance Deductible
Your deductible is the amount of risk you agree to accept before the insurance company starts paying on a claim. With the cost of homeowner's insurance escalating, it no longer makes sense to let the insurance company assume all the risk. If you have a low deductible of $50 to $100, consider raising it to at least $500 to $1,000. You could save up to 25% on your premiums.
Some companies are offering deductibles equal to 1% of the insured value of your home ($1,000 deductible on a $100,000 home). It that seems like a lot of money to pay in the event of a claim, consider this: the trends in homeowner's insurance are for insurance companies to severely penalize customers who file one or more small claims. Often the premiums are jacked way up or the policy is cancelled, and when the customer looks elsewhere for coverage, they may find it costs them three times what they were paying. We should change our perception that insurance of any type is intended to cover all of our expenses when we incur a claim. Those days are over. Think of insurance as risk sharing. How much risk are you willing to assume?
- Combine Your Homeowner's Insurance and Auto Insurance Policies
Consider buying your homeowner's and auto insurance policies from a company that offers both. Some companies offer discounts of 5 to 15% if you buy both types of coverage from them. Check around and make sure the price is lower than buying the two policies from two different companies before making this move.
- Ask About Other Homeowner's Insurance Discounts
Make sure you're receiving all the discounts for which you're eligible. For example, discounts exist for smoke detectors, deadbolt locks, security or fire alarm systems, fire extinguishers in the home, etc. If you're over 55 and retired, you may qualify for an additional 10% discount.
- Don't Buy Homeowners's Insurance Coverage You Don't Need
It makes no sense to buy insurance to protect yourself against risks you are unlikely to encounter; for example, earthquake coverage in a non-earthquake zone, or a jewelry floater to your policy if you don't own expensive jewelry.
- Make Your Home a Better Insurance Risk
Ask your insurance agent what you can do to make your home less expensive to insure. Making changes that reduce the risk of damage in windstorms and other natural disasters is one example. Another is updating old wiring or heating systems, which may reduce your risk of fires and therefore reduce your premiums.
- Know What Your Homeowner's Insurance Policy Covers
Your home is your biggest investment. Make sure it's adequately protected from risks you cannot afford to cover yourself and that it covers any home improvements you've made, major purchases, and increased costs of rebuilding.
- Keep Your Insurance Coverages Up To Date
Once a year, before your homeowner's insurance policy is due to renew, dig out the current policy, read through all the details, and call your insurance agent to discuss any changes in your situation that occurred during the year.
- Avoid Risks That Insurers Shun
Insurers are shying away from some risks. For instance, owning certain types of dogs (Rottweilers, Doberman Pinschers, Pit Bulls), can limit or void your policy. Owning a swimming pool or a trampoline can increase your cost of coverage. Read all the fine print in your policy under the "Conditions and Coverages" sections so you know all the things that are excluded from coverage. You may opt to buy additional coverage to protect yourself from certain exposures.
- Improve Your Credit Score
Insurance companies are increasingly using credit information to price insurance policies. Don't have too many open credit accounts, don't charge close to the limits on your credit cards, and pay all your bills on time to keep your credit score healthy.
- Shop Around for Homeowner's Insurance
Shop around for homeowner's insurance rates but keep in mind that you may be receiving a longevity discount if you've been with your current insurer for several years. Typical discounts are 5% if you've been with the company for three to five years, and 10% for six years or more. Get quotes from three agents, and take any longevity discounts with your current insurer into consideration when you compare prices. Your state insurance department may have rate comparison information available for your state. See www.consumeraction.gov/insurance.shtml. Before you switch insurers, heck out their financial health at www.ambest.com or www.standardandpoor.com.