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 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.
