Purchasing and owning a home is a huge benefit, but many people forget some of the costs associated with it. Homeowners insurance is one cost that doesn’t go away and can affect your budget in a big way. In some cases, your annual premiums could increase over time.
Whether you are reviewing your home insurance renewal or shopping for a new insurance policy, finding the best premium to cut your insurance costs and save money is important. People sometimes think that if they have a price, it’s already the best it can be, but over time your personal situation and the discounts an insurance company will offer may change so it is worth making sure you are getting all the possible discounts on your policy. Here are some simple ways to lower costs on your home insurance without reducing your coverage by using credits and discounts.
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. (Phone numbers and Web sites are on the back page of this brochure.) 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.
Make Sure You Aren’t Over-Insured.
Being under-insured can be a big problem when disaster strikes. But being over-insured means you’re wasting your hard-earned moolah. So the ideal situation is to have just the right amount of coverage. So how do you do that?
Review your policy when it’s up for renewal each year. Specifically, make sure to review any floaters, which are extra insurance for items not fully covered in a standard homeowner’s policy. Examples include things like expensive electronics or equipment, valuable jewelry and artwork. If you no longer own the item or if its value has lowered, cancel or reduce the floater.
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.
Loyalty credits are discounts an insurance company may be willing to give you if you are with them for several years. Sometimes this is called a renewal discount, other times it may be a loyalty credit or even a discretionary credit that the company will give if you ask for it. Every company is different, even if they don’t have a discount by this name, let your insurance representative know that you’re shopping for the best price and you’re wondering if the insurance company might not review your rate due to the fact that you’ve been loyal. It never hurts to ask.
Know What You’ll Cover
You don’t necessarily need to insure a house for as much money as you paid for the property. That’s because the price you paid for your property includes the price of the land, not just your home.
In other words, you want sufficient insurance to cover the cost of rebuilding your home from scratch if it burns down or is blown off its foundation. But your land can’t be incinerated into ashes or blown away, so you need not factor the value of your land into the cost of your homeowners insurance.
Ask About Discounts
Although discounts vary by insurance company, you may qualify for price breaks if:
Your home is equipped with a smoke detector or sprinkler system.
Your home is protected by a burglar-alarm system or deadbolt locks.
You have not filed a claim in a certain number of years.
You don’t allow smoking inside your home.
You are over a certain age.
Call your insurer to see what discounts might be available to you.
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.
Get To Know Your Agent
You know how local mechanics give you extra tips and service because they’ve gotten to know you through the years? Insurance agents have similar habits.
Your insurer may provide a discount on premiums if you have been with the company for several years. Although this incentive is enticing, it is still important to shop around annually to ensure you are still getting the best price.
Getting the Most Discounts to Lower Your Home Insurance Costs
Not every company will offer discounts for all of the items on our list, but as insurance companies look to be more competitive in attracting their target client, discounts like these will come into play. Asking about these discounts will help you find the company that will give you the lowest price while saving you money on your home insurance without having to reduce your coverage.