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1. Shop Around
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 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 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.
Check the financial stability
of the companies you are considering with rating companies such as A.M.
Best (www.ambest.com)
and Standard & Poor’s (www.standardandpoors.com)
and consult consumer magazines. When you've 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. Don’t confuse what you paid for your house with rebuilding costs
The land under your house
isn't at risk from theft, windstorm, fire and the other perils covered in
your homeowners policy. So don't 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 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.
7. Seek out other discounts
Companies offer several types
of discounts, but they don't 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 you're 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, don't 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 you've 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 don't want to spend
money for coverage you don't need. If your five-year-old fur coat is no
longer worth the $5,000 you paid for it, you'll 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 you’re 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 home’s electrical, heating and plumbing systems
are less than 10 years old. If you live in the East, consider a brick home
because it's 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, you'll 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 you're 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.
This information taken from and provided courtesy of the Insurance
Information Institute |
