Prices for home insurance can vary by hundreds of dollars based on the insurance provider. Following a few simple tips can significantly reduce the financial burden of your homeowners insurance coverage. This way you can make sure you are sending more money to your bank account and less to the insurance company with each bill.
A. Shop around
Although it is not as quick as flipping a coin or drawing names from a hat, shopping around more than pays for the extra time spent with all the money you can save. Diving into the phonebook or asking friends is a good way to start. For more concrete information contact your state insurance department or visit the National Association of Insurance Commissioners website (www.naic.org). Once you have narrowed your choices to around three, get price quotes.
B. Raise your deductibles
The amount of money you have to pay on a claim, before your insurance company begins to pay is your deductible. Raising your deductibles can lower your premiums by as much as 25 percent. Discounts generally start at $500 and increase with your deductible up to a $10,000 cap. Over time the discounts can save you more money than you spend on your deductable, but make sure to check with your lender before going much higher. Many mortgage companies do not allow deductibles of more than $1,000.
C. Consider insurance cost before buying a home
When purchasing a home there are an overwhelming amount of factors to consider. One that you will be happy you did not forget is the cost of home insurance. Small steps such as buying a house near a fire hydrant or in a neighborhood that has a professional, instead of a volunteer, fire department can save you as much as 15 percent on your premiums. Do not forget that standard homeowners insurance coverage does not cover some natural disasters, like earthquakes and floods, so you may need to purchase more specialized insurance if your home is at risk.
D. Don’t insure land
Remember that the land your home is built on is not under the same threats of fire and theft as your home. When deciding how much home insurance to purchase do not include the value of your land. If you do include this value in your policy, you will pay far higher premiums than the amount that is necessary.
E. Increase home security
Installing a security system can make you feel and actually be safer. These systems make your insurer feel safer as well, and often discounts will be offered for installing one. Many companies also offer discounts for homeowners who install fire alarms, dead-bolt locks or other safety devices. Just make sure to find out what discounts your insurance company offers before you start investing in expensive security systems.
F. Stay with an insurer
Like fine wine, your home insurance gets better with time. Many companies offer discounts to customers who have had a policy with the company for several years. Typically discounts are around 5 percent after 3 to 5 years, and 10 percent if you have had your policy for 6 years or more. The loyal customer discount should be a reminder of how important it is to shop around when you first buy a policy, so you are able to stay with your insurer for a long time. Even if you are getting discounts, continue to look for even cheaper rates from other companies.
G. Check your policy once a year
To ensure you have the right amount of homeowners insurance coverage, you should review your policy each year. Any new additions to your home or any major purchases need to be covered. On the same note, you should review the value of any items specially insured. If an item is not worth what it used to be, lower your coverage and your premiums.
Even though home insurance can be pricey, following a few simple tips can save you a lot of money. By being a savvy consumer you can keep your premiums down and keep more money in your pocket. All it takes is a little extra time and effort. The time you spend shopping around and checking for discounts will more than pay for itself in savings on each home insurance bill you pay.