7 Ways to Lower Your Homeowners Insurance Costs
By Charles Hopkins
Published 11/28/2007 | 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. The 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 just
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 Deductibles
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 1000, 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
East coast (in U.S.), 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
(California), your earthquake policy has a deductible.
3. Buy Your Home And Auto Policies From The Same Insurer
Some companies that sell homeowners, auto and liability coverage
will take 5 - 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.
4. Get Secure
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 - 20 percent if you install a
sophisticated sprinkler system and a fire and burglar alarm that rings
the police, fire or other monitoring services. 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 your premiums.
5. Watch Your Credit Report
Establishing a solid credit history can cut your insurance costs
too. 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
6. 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.
7. Review Your Policy Limits Annually
You want your policy to cover any major purchases or additions to
your home. But yo don't want to spend money for coverage you don't
need. If your five-year-old fur coat is no longer worth the 5000 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 or
electronics and valuable art work) and pocket the difference.
If you have any 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 usually
only up to 2500 and they offer no business liability insurance. So
always ask around because it could save you a lot of money over the
course of time.