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. .) 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 & Poors
(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 FloodSmart.gov. 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.