In the aftermath of the terrorist attacks on September 11th, the nation’s insurance companies took a look at their books – and realized they were losing big money on many homeowner’s insurance policies.
As a result, companies have not renewed coverage for homeowners who have made more than the average number of claims in a four-year period. They have also been checking out the credit histories of clients and cutting off homeowners who may have problems such as a bankruptcy in the past two years.
For everyone else, the price you pay for your policy could double this year. What you pay can vary by hundreds of dollars depending on a number of factors, including which company sells you your policy.
If you’ve been cut off by your insurance company, you’d better start looking for new coverage. Start by talking to your state’s department of insurance. Ask for a list of insurance companies licensed to do business in your state that provide homeowner’s insurance coverage. (You may be able to get this information on the web. Start by looking at your state’s home page.)
If you work for a large company, and your company provides some insurance coverage, there may be an option to join a group homeowner’s insurance pool. Talk to your firm’s insurance plan administrator for details about eligibility. You should also check out non-profit, business, union and alumni groups for special deals on group insurance coverage.
You might also the company that insures your vehicle. Auto insurance companies frequently offer homeowner’s policies as well. Ask your friends which insurance company they use for their homeowner’s policy.
If you don’t mind using the web for your research, submit an application with one or more of these online insurance brokers: Quicken.com, Insweb.com, Insure.com or Yahoo.com. Filling out a single application on each of these sites can show you quickly whether you’d be eligible for coverage.
You might also try individual insurance companies’ web sites as well. The company that owns Countrywide Home Loans also offers homeowner’s insurance (Countrywide.com). Check out Travelers.com, The Hartford.com, LibertyMutual.com, and other companies to see what kinds of policies they offer.
If you want to see how other consumers have rated various insurance companies’ homeowner’s policies, check out JDPower.com. JD Power has been conducting consumer research on a variety of topics for more than 30 years. You may also be able to get additional information from the National Association of Insurance Commissioners (NAIC.org).
Before you sign up for a policy, be sure you’ve done everything you can to get the cost down as low as possible. The Insurance Information Institute (iii.org) publishes a brochure called "12 Steps You Can Take To Help You Save Money on Your Homeowner’s Insurance," which you can find online.
Here are a few ways you can save money on your policy:
-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. 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 on your annual premium.
If you live in a disaster-prone area, your insurance policy may contain a separate deductible for certain kinds of damage. East coast homeowners may have a separate deductible for damaged caused by windstorms. Florida homeowners may have a hurricane deductible
-Look for discounts. Buying your home and automobile policies from the same insurer could take as much as 15 percent off the cost of both policies. Just be sure the combined price is lower than if you bought two separate policies. You might also get a discount if you add security system, or 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.
Age can help. Since retired people stay at home more than working people, they are less likely to be burglarized and may spot fires sooner. 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.
-Don’t confuse the sales price with the true cost of rebuilding your home. Even if your house goes up in smoke, you won’t have to buy a new lot. So don’t insure the value of your land or you could overpay.
-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.
Finally, Loretta Worters, a spokeswoman for the Insurance Information Institute, says many homeowners don’t realize damage caused by floods and earthquakes isn’t covered by a standard homeowner’s policy.
If you buy a house in a flood-prone area, you should purchase a separate 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.
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.
If you have expensive jewelry, artwork or furniture, you may need to purchase special riders that cover the replacement value of those items. And if you run a business out of your home, be sure to discuss coverage for that business. Most homeowner’s 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.