10 Tips that May Lower Your Homeowner’s Insurance Costs

Before you close on your new home, you will need to obtain homeowners insurance.  Don’t wait until just before closing to think about what insurance company you will be hiring to insure your home, its contents, and your investment.  Take the time to read over the article below. You just may save a few bucks, and insure that you receive the best possible coverage for your home.

1st the Obvious:  Shop Around – Don’t just go with the same company dad always used, or knuckle under to the catchiest jingle on TV.  It may take some time, but doing a little investigation may reap its rewards in savings.  Ask friends and family. Are they satisfied with their rates?  Have they ever had to file a claim? Was the customer service stellar or poor?  Call the well known agencies. The National Association of Insurance Commissioners has information on companies working in our state. Many states, including Ohio and Kentucky, will provide information to help you choose a company.  You can get information about any complaints on file against the insurance companies, and often typical rates are available.

Take advantage of online insurance quote services.  This will give a good idea of price ranges, and help you select what companies you want to investigate further.  Since a low rate is the least of your problems should you need to file a claim, be sure to access any information you can about how claimants feel about the service they received.  Was the claim adjuster friendly, helpful, and sympathetic to the problem?  Again, ask people you know and use the state provided complaint information.

After gathering this information, you may feel comfortable in researching the financial stability of the companies you are considering, by logging onto a couple of rating companies sites.  You can check out the companies with A.M. Best, or at  Standard  & Poor’s site.

Now that you’ve done a little shopping around, it’s time to get price quotes.

2nd Raise Your Deductible, Lower Your Premium -  The amount of money you pay toward the repairs of any claim you might have, before your insurance company will pay on a claim, is your deductible.  The higher the deductible, the lower your premium will be.  Most companies would recommend a $500 deductible.  If you know that you would be able to cover a higher deductible, perhaps $1000 or $2500, should you need to file a claim, you will save as much as 25%, and possibly more, on your deductible.

3rd Know the Difference Between Market Value & Cost to Rebuild-  When you selected your home, one of the considerations may have been the lot on which the home sits.  A good lot can add market value.  The lot your home sits on is not at risk of windstorm, hail damage, or theft.  Don’t include its value when obtaining your insurance policy. Your premium will be higher than necessary if you do.

4th Take Advantage of Multi-Policy Discounts – Most companies that will cover your home, will also cover your auto.  Check to see if you can obtain a discount, about 5% - 15%, off your premium by having two or more policies.

5th Talk to the Agent About Improvement Discounts-  Improvements you make to your home, that reduce risk, could greatly reduce your premiums.   If you are buying a vintage, older home, check into the insurance savings of updating the systems of the homes; electrical, heating and plumbing.
6th Home Security Discounts – Smoke detectors, burglar alarms, deadbolt locks.  All can potentially reduce your premiums.  Sprinkler systems with fire alarms, intruder alerts that notify police. These systems can potentially reduce your premiums by 15% - 20%. Check with your agent for their recommendations to obtain the highest degree of safety coverage, with the lowest out of pocket for installation, with good premium savings on your insurance coverage.

7th Any “No-Claim” Discounts Available?- Not all companies offer the same type of discounts. Some companies will reduce your premiums if you go for a specific period of time without filing any claims.  There are discounts for the retired, or persons over 55.  There may be discounts available to you if you are a member of a particular professional association. If your employer has the option available to you, you may do well to insure through this organization, getting a better rate there than anywhere else.

8th Good Credit, Lower Premium- Your credit score has become increasingly more important to insurance companies, as they use your score to determine your homeowner’s premium and risk assessment. Keep your credit score high and keep your credit report accurate. Pay the bills on time, don’t take out more credit than you need. It’s just good sense.

9th It’s Good to Shop Around, But Stay Put if the Deal is Good- So you’ve been with the same company since you first learned to drive.  You want to know if you are paying a good rate.  It’s good to shop around, but you may find that you are obtaining a reduced premium because you’ve been a loyal customer.  Some companies will reduce the premium by 5% if you stay with them for 3 – 5 years.  There’s a potential 10% savings if you’ve been with them for 6+ years.

10th and Final Tip – Know the Limits on your Policy & Riders. Use Riders Only as Needed – As you make major improvements to your home, or make additional major purchase, you want to make sure you are covered against any type of loss.  Some items may reduce in value as time goes on. You may not need to insure the expensive high-tech equipment against loss at the same level you first did, as technology changes.  Cancel the riders on expensive jewelry, art work, etc if values decline.

Other Thoughts About Homeowner’s Insurance

You may want to check out the CLUE report of the home you are buying. The CLUE (Comprehensive Loss Underwriting Exchange) report will give you the insurance claim history of the home. 

Flood insurance will be an additional $400 a year or so on average, if your new home is in a flood prone area.  FEMA can provide good information on flood insurance at www.floodsmart.gov.
Earthquake insurance is not automatically included in many policies in this area.  Ask your agent for specifics. 

If you run a business out of your home, you may want to consider making sure that any business equipment or supplies are covered.

I hope you found this to be helpful, and maybe picked up an idea or two along the way.