Homeowners Insurance - 12 Ways to Save Money on Homeowners Insurance
Friends, family, the phone book and the Internet are some of the sources you can use to find homeowners insurers. Get a wide range of prices from several companies. But dont consider price alone. The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but you buy insurance in case you need to make a claim, so its important to get a company with a good reputation. 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 ratings of the companies with AM Best or Standard and Poors.
Raise Your Deductible
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay. Deductibles on homeowners policies typically start at $250. Increase your deductible to
$ 500 -- save up to 12 percent
$1,000 -- save up to 24 percent
$2,500 -- save up to 30 percent
$5,000 -- save up to 37 percent
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.
When You Buy a Home Consider How Much Insuring It Will Cost
A new homes electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house. Insurers may offer you a discount of 8 to 15 percent if your house is new. Check the homes construction: In the East brick is better, because of its resistance to wind damage, and in the West frame is better, because of its resistance to earthquake damage. Choosing wisely could cut your premium by 5 to 15 percent. Avoiding areas that are prone to floods can save you about $400 a year for flood insurance. Homeowners insurance does not cover flood-related damage. The closer your house is to firefighters and their equipment, the lower your premium will be.
Insure Your House, Not the Land
The land under your house isnt at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So dont include its value in deciding how much homeowners insurance to buy. If you do, youll pay a higher premium than you should.
Improve Your Home Security and Safety
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 station or other monitoring facility. These systems arent cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much youd save on premiums.
Smoking accounts for more than 23,000 residential fires a year. Thats why some insurers offer to reduce premiums if all the residents in a house dont smoke.
Seek Out Discounts for Seniors
Retired people stay at home more and spot fires sooner than working people and have more time for maintaining their homes. If youre at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.
See If You Can Get Group Coverage
Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your associations director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues.
Stay With an Insurer
If youve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for 3 to 5 years; by 10 percent if you remain a policyholder for 6 years or more.
Compare the Limits in Your Policy to 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 dont want to spend money for coverage you dont need.
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 have been buying your homeowners insurance through a government plan, you should check with an insurance agent or company representative. 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.
If you are obtaining a mortgage for the first time and not sure who to use try asking your mortgage professional to see who they use or who they might recommend.
The most common home owners insurance policies written today is the Special Form (HO-3). The Basic Form (HO-1) and Broad Form (HO-2) are not used often nowadays. The difference in the various forms are the perils covered. The HO-3 offers coverage against the most perils.
Your homeowner's insurance will need to be paid for at least 3 months in advance when completing a mortgage refinance transaction. You will also need to change the name of the loss payee to the name of your new lender. In most cases, the loan settlement agent will handle these things for you.
Very often if you are refinancing for a large amount of cash out your homeowners coverage will need to be increased to cover the loan amount. Also check to be sure your policy states that it covers 100% replacement cost in the event of a total loss.
If you are changing your home owners insurance company with your refinance, you will need to pay the first year premium up front. This will be the same with a purchase as it will be a new policy. This is of course in addition to the reserve your lender will require in the escrow account.
If your homeowner's insurance is currently pre-paid or paid through escrow, you will have to speak to your current lender to verify how far into the future your homeowner's insurance is paid up
Refinancing also provides an excellent opportunity for your insurance agent to review your insurance needs. As homes are changed, remodeled, etc. their coverage needs change and it is important to know that you have adequate coverage.
Having homeowners insurance with the same company that provides your auto insurance will usually result in a discount for both policies. Check with your insurance agent to see what discounts you qualify for.