|
The price you
pay for your homeowners insurance can vary by hundreds of dollars,
depending on the size of your house and the insurance company you buy
your policy from. Here are some ways to save money.
 Shop
around
Prices vary from company to company, so it pays to shop around.
Get at least three price quotes. You can call
companies directly or access information on the Internet. Your state
insurance department may also provide comparisons of prices charged by
major insurers.
Check the financial health of insurance companies by using ratings from
independent rating agencies and consulting consumer magazines.
Get quotes from different types of insurance companies. Some sell
through their own agents. These agencies have the same name as the
insurance company. Some sell through independent agents who offer
policies from several insurance companies. Others do not use agents.
They sell directly to consumers over the phone or via the Internet.
But don't shop price alone. You want a company that answers your
questions and handles claims fairly and efficiently. Ask friends and
relatives for their recommendations. Contact your state insurance
department to find out whether they make available consumer complaint
ratios by company.
Select an agent or company representative that takes the time to answer
your questions. Remember, you'll be dealing with this company if you
have an accident or other emergency.
Raise your deductible
A deductible is the amount of money you have to pay toward a loss before
your insurance company starts to pay a claim. The higher your
deductible, the more money you save on your premium. Consider a
deductible of at least $500. If you can afford to raise it to $1,000,
you may save as much as 25 percent.
If you live in a disaster-prone area, your insurance policy may have a
separate deductible for damage from major disasters. 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 may have a deductible.
Buy
your home and auto policies from the same insurer
Most companies that sell homeowners insurance also sell auto and
umbrella liability insurance. (An umbrella liability policy will give
you extra liability coverage.) Some insurance companies will reduce your
premium by 5 percent to 15 percent if you buy two or more insurance
policies from them. But make certain this combined price is lower than
buying the coverages from different companies.
Make
your home more disaster-resistant
Find out from your insurance agent or company representative what you
can do 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 and shatter-proof glass, 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.
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'll pay a higher premium than you should.
Ask about discounts for home security devices
You can usually get discounts of at least 5 percent for a smoke
detector, burglar alarm or dead-bolt locks. Some companies may cut your
premiums 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. However, these systems aren't cheap
and not every system qualifies for a discount. Before you buy one, find
out what kind your insurer recommends, how much the device would cost
and how much you'd save on premiums.
Seek out other discounts
Many companies offer discounts, but they don't all offer the same types
of discounts or the same level of discount in all states. Ask your agent
or company representative about discounts available to you. For example,
if you're at least 55 years old and retired, you may qualify for a
discount of up to 10 percent at some companies. If you've completely
modernized your plumbing or electrical system recently, some companies
may also provide a price break.
See if you can get group coverage
Does your employer administer a group insurance program? Check to see if
a homeowners policy is available and is a better deal than you can find
elsewhere. In addition, professional, alumni and business groups may
offer an insurance package at a reduced price.
Stay with the same insurer
If you've been insured with the same company for several years, you may
receive a discount for being a long-term policyholder. Some insurers
will reduce premiums by 5 percent if you stay with them for
three-to-five years and by 10percent if you're a policyholder for six
years or more. To ensure you're getting a good deal, periodically
compare this price with the prices of policies from other insurers.
Review policy limits and the value of your
possessions annually
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)
and pocket the difference.
Look for private insurance if you are in a
government plan
If you live in a high-risk area—one that is especially vulnerable to
coastal storms, fires or crime—and you've been buying your homeowners
insurance through a government plan, find out from insurance agents,
company representatives or your state department of insurance which
insurance companies might be interested in your business. You may find
there are steps you can take that will allow you to buy insurance at a
lower price in the private market.
When you're buying a home, consider the cost of
homeowners insurance
The price you pay for homeowners insurance depends in part on the cost
of rebuilding your home and the likelihood that it will be damaged by
natural disasters or that it will burn down. You may pay less if you buy
a house close to a fire hydrant or in a community that has a
professional rather than a volunteer fire department. You may also pay
less 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 percent to 15 percent.
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
http://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 and the construction
features.
If you have questions about insurance for any of your possessions, be
sure to ask your agent or company representative. For example, if you
run a business out of your home, be sure you have adequate coverage.
Most homeowners policies cover business equipment in the home, but only
up to $2,500 and they offer no business liability insurance.
|
