When the going gets expensive, savvy consumers shop around for the best deal. That’s the situation many homeowners are facing with their homeowners’ insurance policies.
If you have more than one claim in 7 years, or if you live in a flood or disaster-prone area, your insurance premiums may have increased dramatically over the past five years.
There are at least 10 things you can do that should help lower the cost of your policy, perhaps significantly.
Shop around. Insurers are betting that once you have a policy, you’ll stick with it and never check to see if you could buy it elsewhere for less. The truth is you may be able to lower your premiums significantly if you shop around. Get quotes from a direct underwriter like Amica, GEICO and USAA. They do their selling over the phone or over the Internet, and if you qualify, you could save big bucks.
Raise your deductible. Some insurance companies will drop you if you make more than one claim every five years. So, think about your insurance as catastrophic coverage — and plan on picking up the cost of the everyday expenses. Raising your deductible from $250 to $500 might enable you to shave 12 percent off of your premiums. Raise your deductible to $1,000, and your savings could be greater.
Tout your improvements. A new roof made of a flame-repellant material might earn you a discount on your insurance premium. A new plumbing system, new wiring or a new heating system might also help you qualify for a discount.
Get connected. A home security system might help you qualify for a small discount of 3 to 5 percent. But connect it to the local police and fire station, and you might lower your premium by 15 percent. A sprinkler system and smoke detectors might qualify you for a smaller discount.
Grow old. If you’re over the age of 55, you can probably get a discount. The same thing goes if you’re retired. Apparently, the Baby Boomers are less of a threat around the house.
Educate yourself. Your insurance company may offer an education program or brochures that will allow you to lower your premium once you’ve attended a session or read the materials.
Buy your home and auto policy from the same insurer. The costs of attracting new business is expensive, so insurers often will offer you a discount if you add policies. Some companies that sell homeowner’s, auto, and liability coverage will take 5 to 15 percent off of your premium if you buy two or more policies. (Some states don’t allow this discount, but ask if it is available just in case.)
Insure your home, not the land it sits on. Homeowner’s insurers won’t cover the cost of your land if your house is destroyed. The premise is that even if your home is swept away by a tornado or completely devastated by a hurricane, the land will still exist. If a home costs $500,000 to rebuild, but you buy a $1 million homeowner’s insurance policy, the insurer won’t just hand you a $1 million check. They’ll simply pay to rebuild your home. So, don’t pay for more insurance than you need. But one smart move might be to add building code coverage to your policy. That way, if building codes change, and it is more expensive to rebuild, you’ll be covered without paying for insurance you don’t need.
Stop Smoking. The Insurance Information Institute (iii.org) says smoking accounts for more than 23,000 residential fires each year. So, quit. Not only will you save on your homeowner’s insurance, but you’ll probably save a bundle on health insurance, health-related costs, tobacco products you won’t have to buy, and cleaning bills.
Look for group coverage. Do you belong to a professional trade, nonprofit, or alumni organization? These groups often offer various insurance products at a discounted price.
Keep your credit score as high as possible. Insurers have started pulling copies of applicants’ credit scores as a means of determining risk. Apparently, if you have a higher credit score, then you’re less likely to make an insurance claim. Check out your credit history for free at www.annualcreditreport.com. For an additional $6.95, you can purchase a copy of your credit score.
Longtime customer? Ask for a discount. If you have been with your insurer for a long time, be sure to ask your own insurer for some special considerations. Some companies will give a discount of 5 percent if you’ve been there 3 to 5 years. According to the Insurance Information Institute, that discount goes up to 10 years if you’ve held onto your policy for longer than that.