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Ways to Lower Your Homeowners Insurance Costs Insurance Information InstituteThe price you pay for your homeowners insurance can
vary by hundreds of dollars, depending on the insurance company you buy your
policy from. Here are some things to consider when buying homeowners insurance.
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 homeowner’s 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 coverage's 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
homeowner’s 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 homeowner’s 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
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