Homeowner’s insurance rates can vary substantially from state to state and from company to company. Today it is much easier to compare rates over the internet as almost all insurance companies have a rate calculator online. As you review your insurance and compare quotes, follow tips to lower your premium and calculate your potential savings. Some good resources for quality companies are your state’s insurance commission, The National Association of Insurance Commissioners, consumer guides at www.ftc.gov , friends and family.
Raising your deductible is the easiest thing you can do to lower your insurance premium. According to the Insurance Information Institute, if you can afford to raise your deductible to $1,000 from $500, you may save as much as 25% on your annual premium. Homeowner’s insurance is not intended as a catchall for small repairs to your home. The insurance is intended for major peril and by submitting claims for smaller "nuisance" items, you will lose any savings with higher premiums.
Be sure to define what is insured and what the cost to rebuild your home is. The land costs should not be included in the value since there is no chance of it being lost in a fire, damaged by a storm, or stolen.
Purchasing your Homeowner’s insurance and your car insurance from the same insurance carrier could save you 5 to 15 percent on both premiums.
By adding new security devices to your home you can reduce your premium by up to 20 percent. Insurance companies highly value the protection afforded by fire sprinkler systems, burglar alarms, and fire alarms, especially when they are connected to monitoring agencies such as your local police and fire department. Deadbolts and window locks can also be included in this. These systems are not cheap and not every insurer will offer substantial discounts, so you should check with your current carrier to determine what savings can be expected.
By keeping your coverage with a company for several years, you may receive a discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. You should periodically compare this price with that of other policies to make sure that they are still competitive. Some companies are offering longer terms which lock in the rate for 3 or more years. You may want to consider this if you plan on staying in your home long-term and if you live in a part of the country that experiences severe weather or an increased chance of damage.
If you operate a business out of your residence, your policy will probably only cover about $2,500 in damages. If you need more, discuss your options with your insurer to see if you can buy an umbrella policy or a rider that will protect your home and business as required without compromising coverage for either.
Upgrading your home’s electrical, heating, and plumbing systems, roof, or overall structure, are likely to be in better condition than those of an older home. If you have made any home improvement in the past year, you should see if a new policy will reward you with discounts. You may be able to save on your premium by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. Some items that can reduce the damage to your home and thereby reduce claims and deductibles are securing your hot water heater, adding earthquake straps to the foundation, and adding bracing to walls to reduce lateral movement.
Companies can offer other types of discounts as well. Since most retired people stay at home more than working people, they are less likely to be burglarized and may spot fires sooner. They also have more time for maintaining their homes. If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.
If you live in a development that has a Homeowner’s Association, the entire association can purchase coverage that can reduce the premiums for an entire neighborhood and also cover the members of the Association’s Board. One insurance company that offers this type of coverage is Community Association Underwriters, Inc.; you can research their coverage at www.cauinsure.com .
Your policy should cover any major purchases or additions to your home, but you should not spend money for coverage that you don’t need. You may have jewelry, electronics, and other valuable possessions that depreciate over time; and it is in your best interest to compare the coverage of your floater, the extra insurance that covers these extra items, to the actual value of your possessions at least once every year. As items depreciate, lower your coverage. A flat screen television that cost $3,000 five years ago may only be worth $500 now and a new one may only cost $1,200.
When buying a home, check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have. If you buy a house in a flood-prone area, you’ll have to pay for a flood insurance policy that costs an average of $400 a year. You can get more information on this at www.floodsmart.gov.
Conduct as much research as you feel is necessary and get at least three competitive quotes from insurers. Make sure that the coverage is similar between the policies and if there are major differences, don’t be afraid to question the agent as to why they are not providing similar coverage.
