12 Secrets To Lowering Your Homeowners Insurance

12 Secrets To Lowering Your Homeowners Insurance - The following are 12 valuable secrets to help you lower your homeowners insurance cost.

1. Shop Around

Itll 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 listed here.) National Association of Insurance Commissioners (www.naic.org) 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 dont 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.

Check the financial stability of the companies you are considering with rating companies such as A.M. Best (www.ambest.com) and Standard & Poors (www.standardandpoors.com) and consult consumer magazines. When youve narrowed the field to three insurers, get price quotes.

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. 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.

3. Dont confuse what you paid for your house with rebuilding costs

The land under your house isnt at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So dont include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.

4. Buy your home and auto policies from the same insurer

Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.

5. Make your home more disaster resistant

Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums 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. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

6. 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 arent 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 youd save on premiums.

7. Seek out other discounts

Companies offer several types of discounts, but they dont all offer the same discount or the same amount of discount in all states. For example, since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner, too. Retired people also have more time for maintaining their homes. If youre at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.

8. Maintain a good credit record
Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowners insurance policies. In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied. To protect your credit standing, pay your bills on time, dont obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

9. Stay with the same insurer

If youve kept your coverage with a company for several years, you may receive a special 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. But make certain to periodically compare this price with that of other policies.

10. Review the limits in your policy and the value of your possessions at least once a year

You want your policy to cover any major purchases or additions to your home. But you dont want to spend money for coverage you dont need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, youll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies such as expensive jewelry, high-end computers and valuable art work) and pocket the difference.

11. Look for private insurance if you are in a government plan

If you live in a high-risk area -- say, one that is especially vulnerable to coastal storms, fires, or crime -- and have been buying your homeowners insurance through a government plan, you should check with an insurance agent or company representative or contact your state department of insurance for 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 youre buying a home, consider the cost of homeowners insurance

You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your homes electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because its more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5 to 15 percent.

Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have.

Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, youll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at www.fema.gov/nfip. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area. In California the California Earthquake Authority (www.earthquakeauthority.com) provides this coverage.

If you have questions about insurance for any of your possessions, be sure to ask your agent or company representative when youre shopping around for a policy. For example, if you run a business out of your home, be sure to discuss coverage for that business. Most homeowners policies cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance. Although you want to lower your homeowners insurance cost, you also want to make certain you have all the coverage you need.

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Ways to Save Money on Homeowners Insurance - STAY WITH AN INSURER... If youve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for 3 to 5 years; by 10 percent if you remain a policyholder for 6 years or more.

Installing a security system in your home can reduce your homeowners insurance by as much as 20%. Consult with your insurance agent for more details.

In addition to keeping all your insurance policies with the same company, look into purchasing an umbrella policy. This can help in covering things that aren't covered by the others as well as decreasing overall expeditures each year. Your insurance company rep can help you with all of this. If you do not have a good agent, ask Major Harris for some excellent contacts.

You may also get a discount by having your auto and homeowners' insurance with the same company.

Many insurance companies have also begun to base your premiums off of your credit rating. Making responsible financial decisions and paying your bills on time will help you keep your premiums down as well.

Review your coverage with your insurance agent from time to time. While it is important to have sufficient coverage on your home, over-insurance is wasteful. As a measure to curb insurance fraud, regardless how much insurance coverage is purchased, insurance companies usually do not pay out more than the replacement cost of the insured property.

Many insurance companies have multi-line discounts if you carry several policies with the same agent. Sometimes, adding a life insurance policy can be done at almost no cost when discounts are applied from other products such as a home owner's policy or automobile policy. Also, if you use renter's insurance and have decided to buy a home be sure to ask your agent if you have earned any credits from your renter's policy that can be used to reduce the premium on your home owner's policy.

Combine all accounts that you can with the same insurance company. You can normally buy insurance policies for life, disability, auto and home owners from the same insurance company. the benefit to this is you may save money on the other policies ass well. By also keeping claims to a minimum your policy premium should normally decrease over time or increase very little compared to someone who makes numerous claims.

Saving money on homeowner's insurance during a refinance by staying with the same insurance company is a great first step to saving money on your refinance closing costs, but for even greater savings, you may qualify for a discount from your title insurer as well. Discuss the option of not only using the same hazard insurance company for your refinance, but also electing to stay with your current title insurance company, with your refinance advisor during the early stages of the application process.