On Stuff That Matters
A Dozen More Ways To Save On Homeowners Insurance
Depending on which insurance company you buy your policy from, the price of your homeowner's insurance can vary by hundreds of dollars. Here are some things to think about before you buy home insurance.
It will take some time, but you could save a lot of money by doing it. You can ask your friends, look in the Yellow Pages, or call the insurance department in your state. (The back page of this brochure has phone numbers and websites.) At www.naic.org, the National Association of Insurance Commissioners has information, such as complaints, that can help you choose an insurance company in your state. States usually have information about how much major insurers usually charge, and many states also have information about how often customers have problems with each company.
Check out consumer guides, insurance agents, insurance companies, and online services that give insurance quotes. This will give you an idea of the price range and tell you which companies have the lowest prices. But don't consider price alone. The insurance company you choose should have a fair price and give you the kind of help you'd expect if you needed to file a claim. So, to figure out how good the service is, use the above complaint information and talk to a few insurers to get a feel for how they work. Ask them what they think you could do to save money.
Check the financial stability of the companies you are considering with rating companies like A.M. Best (www.ambest.com) and Standard & Poor's (www.standardandpoors.com/ratings) and consumer magazines. Get price quotes once you've narrowed your choices down to three.
2.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. Most insurance companies now say that your deductible should be at least $500. If you can afford it, raising your deductible to $1,000 could save you up to 25%. Remember that if you live in an area that is prone to disasters, your insurance policy may have a different deductible for different types of damage. If you live near the coast in the East, you may have a separate deductible for windstorms. If you live in a state that is prone to hail storms, you may have a separate deductible for hail. If you live in an area that is prone to earthquakes, your earthquake policy has a deductible.
3.Don't mix up what you paid for your house with how much it would cost to rebuild it.
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't use its value to figure out how much home insurance to buy. If you do, your premium will be more than it should be.
4.Get your home and car insurance from the same company.
Some companies that sell homeowners, auto, and liability insurance will take 5 to 15% off your premium if you buy two or more policies from them. But make sure that the price of this package is less than if you bought the different coverages from separate companies.
5.Make your home more disaster resistant
Find out from your insurance agent or company rep what you can do to make your home more resistant to windstorms and other natural disasters. You might be able to lower your insurance costs if you add storm shutters, strengthen your roof, or buy stronger roofing materials. There are ways to make older homes better able to handle earthquakes. Also, think about updating your heating, plumbing, and electrical systems to lower the risk of damage from fire and water.
6.Boost the safety of your home.
Most of the time, a smoke detector, burglar alarm, or dead-bolt lock will get you a discount of at least 5%. Some companies will lower your premium by up to 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 are not cheap, and not all of them are eligible for discounts. Before you buy one, ask your insurance company what kind they recommend, how much it will cost, and how much you'll save on your premiums.
7.Look for discounts.
Companies offer different kinds of discounts, but not all of them offer the same discount or the same amount of discount in all states. For example, because retired people spend more time at home than people who work, they are less likely to be broken into and may also notice fires sooner. They also have more time to keep their homes in good shape. Some companies may give you a discount of up to 10% if you are at least 55 years old and retired. Some employers and professional groups offer group insurance plans that may be cheaper than what you can get elsewhere.
8.Keep your credit record in good shape.
Getting a good credit history can help you pay less for insurance. More and more, insurance companies use credit information to price homeowner's insurance. In most states, if your insurance company does something bad, like raise your rate, they have to tell you. At that point, you should check that the information the insurance company used is correct. Pay your bills on time, don't get more credit than you need, and keep your credit balances as low as possible to protect your credit score. Check your credit record often, and if you find any mistakes, fix them right away so that your record stays correct.
9.Keep the same insurance company.
If you've been with the same company for a long time, you might get a discount for being a long-term policyholder. Some insurance companies will cut your premiums by 5% if you stay with them for three to five years and by 10% if you stay with them for six years or more. But make sure to compare this price with that of other policies every so often.
10.At least once a year, you should look over the limits of your policy and the value of your things.
You want your insurance policy to cover any big purchases or changes you make to your home. But you don't want to pay for insurance that you don't need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you should lower or cancel your floater (extra insurance for items like expensive jewelry, high-end computers, and valuable art work that are not fully covered by standard homeowners policies) and keep the difference.
11.Look for private insurance if you are in a government plan
If you live in a high-risk area, like one that is prone to coastal storms, fires, or crime, and you have been getting your homeowners insurance through the government, you should talk to an insurance agent or company representative or call your state department of insurance to find out 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.
12.When you buy a home, think about how much homeowners insurance will cost.
If you buy a house near a fire hydrant or in a town with a paid fire department instead of a volunteer one, you may pay less for insurance. It may also be cheaper if the electrical, heating, and plumbing systems in your home 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 area that has a lot of earthquakes, you should look for a house with a wooden frame because it is more likely to stand up to this kind of disaster. If you choose wisely, you could save between 5 and 15% on your premiums.
Check the home's CLUE (Comprehensive Loss Underwriting Exchange) report before you buy it. These reports show the history of insurance claims on the property and can help you figure out what kinds of problems it might have.
Remember that a standard homeowners policy does not cover flood damage or damage from an earthquake. If you buy a house in an area that is likely to flood, you'll have to pay for flood insurance, which costs about $400 a year on average. On its website, www.fema.gov/nfip, the Federal Emergency Management Agency gives useful information about flood insurance. Most insurance companies offer a separate plan for earthquakes. How likely earthquakes are in your area will affect how much the coverage will cost. In California, this is covered by the California Earthquake Authority (www.earthquakeauthority.com).
When you're looking for a policy, be sure to ask your agent or company rep about insurance for any of your things if you have questions. For example, if you run a business out of your home, make sure to talk about coverage for that business. Most homeowner's policies cover business equipment in the home, but only up to $2,500, and they don't cover business liability. You want to lower the cost of your home insurance, but you also want to make sure you have all the coverage you need.