Fifteen ways to save on your home insurance
By Haig Artan
Here are 15 ways to slash the cost of your home insurance. A wide variety of discounts are available, ranging from the type of building material used to build your home to how close you live to a fire station. These discounts will vary by state and insurance company.
1. Shop around
Check with several different home insurance companies to get rate quotes (an independent insurance broker can provide rate quotes from a variety of companies). Do your friends or family members like their home insurance company?
2. Raise your deductible
The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Typically, home insurance deductibles are $1,000.
Change your deductible to:
- $500 and pay up to 12 percent on your premiums.
- $1,000 – standard.
- $2,500 and save up to 12 percent.
- $5,000 and save up to 26 percent.
Make sure you can afford to pay the higher deductible out of pocket if something should happen.
3. Buy your home from the a carrier that specializes in property insurance
Few companies actually specialize in property insurance; they offer lower rates than companies who attempt to sell you multiple policies based on offering discounts for additional lines of insurance (these carriers charge more for insurance based on surveys researched by the Dept. of Insurance in many States).
4. Consider insurance when buying a home
If you’re looking at buying a home, think about the cost of insuring the home. A newer home’s electrical, heating, and plumbing systems and overall structure are likely to be in better condition than those of an older home. This can lead to a discount on your premiums.
You’ll also want to consider the construction of the home and where you live. If you live on the Atlantic Coast, you’ll want the house to be able to stand up to wind damage, while on the Pacific Coast, you need to keep earthquakes in mind. In most States, Earthquake and Flood coverage is not included on the homeowners insurance policy.
5. Insure your home, not the land
While your home and its contents are at risk from fire, theft, windstorms, and other perils, the land your home sits on is not. Don’t include the value of the land in deciding how much home insurance you need to buy. You need to purchase coverage for the reconstruction of the dwelling and replacement of your personal contents. Your agent can help you assess the coverage you need.
6. Improve security and safety
Items such as dead bolt locks, burglar alarms, and smoke detectors can usually bring discounts of 5 percent each, depending on the company. Your insurance company may also offer a significant discount of 15 or 20 percent if you install a sophisticated home-security system. If you’re thinking about buying such a system, check with your insurer to see which systems you’ll get a discount for.
7. Stop smoking
Smoking accidents account for more than 23,000 residential fires every year. Some insurers offer to reduce premiums if no one in the home smokes.
8. Look for senior discounts
Insurance companies have found that retired people stay at home more and spot fires sooner than working people. Older people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you might qualify for as much as a 10 percent discount.
9. Look for group coverage
Large employers and alumni and business associations often work out insurance deals with an insurance company, which includes a discount for employees and members.
10. Stay with an insurer
If you’ve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent after you stay with them for three to five years; and some companies will discount you as much as 10 percent after six years.
11. Check your policy annually
You want your policy to reflect the value of your home and belongings. If you review your policy every year, you will be able to make the necessary adjustments. If, for example, you just sold a valuable painting, you won’t to need the same amount of personal property coverage. But if you’ve added a garage, you’ll need to increase your dwelling coverage.
12. Look for private insurance first
If you live in a high-risk area — one that is especially vulnerable to coastal storms, fires, or crime — and think you’ll be forced to buy home coverage from your state’s high-risk insurance pool, check first with an independent insurance broker. You may find that you can still buy insurance at a lower price in the private insurance market than from your state’s insurer of last resort.
13. EFT Payments
Many companies now charge up to $5.00 or more for mail payments, so if you have your payments automatically deducted it will help shave off some excess cost. Sometimes the deductions can come from your credit card so you do not have to worry if the money is in your bank account when payment time comes.
14. Credit Ratings
Many companies now check your credit and base your policy on the information they find. Make sure your credit is in good shape, and if not, seek out other companies that do not run credit checks. Please note: some States prohibit carriers from checking credit.
15. Actual Cash Value vs. Replacement Cost
Actual cash value coverage reimburses the policyholder for the cost of the property at the time of the claim, minus the deductible. If you use this option, you need to account for depreciation, which may result in a lower claim payment than you expect.
Replacement cost coverage will reimburse the full value of the item lost- after you purchase the new item and submit your receipts. The up front cost is greater, but you are more likely to receive accurate compensation for your possessions.