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15 Ways to Save on Home Insurance

Looking to squeeze the most from your home insurance dollar? Try these practical steps (brought to you by www.insure.com). We’ve also included some of our own thoughts in paranthesis.

1. Shop around

Check with several different home insurance companies to get rate quotes. An independent insurance agent can provide rate quotes from multiple companies. Ask around: Do your friends and family like their home insurance company? (A Pinnacle Point Insurance agent can provide you with home insurance quotes from several companies so we can find a policy that fits your needs and your budget!)

2. Raise your home insurance deductible

The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Typically, home insurance deductibles start at $250. The Insurance Information Institute (III) estimates that if you increase your deductible to either $500 or $1,000, you can realize double-digit decreases on your premiums. For example, an increase to $1,000 can save you up to 25 percent. But make sure you can afford to pay the higher deductible out of pocket if something should happen. (If you live in Harris County or Fort Bend County, it’s likely that you already have a 2% deductible for named storms – i.e. hurricanes or tropical storms – but you can also raise your ‘wind and hail deductible’ or your ‘all other perils’ deductible to 2% to save money.)

3. Buy your home and auto insurance policies from the same insurance company

Most companies will give a multiline discount if you buy both home insurance and auto coverage from them. It’s one of the more significant discounts you can garner, says Michael Barry, spokesperson for the III. (While many carriers offer a companion product discount for having your home and auto insurance through them, it’s also quite possible to find a better rate by having your home and auto insurance through two separate companies. I have mine through two separate companies.)

4. Consider insurance when buying a home

If you’re looking at buying a home, think about the cost of it. A newer home’s electrical, heating and plumbing systems and overall structure are likely to be in better condition than those of an older home. This can lead to lower premiums. (Home insurance for newer homes is almost always cheaper than home insurance on an older home. The reason for this is that insurance companies give an ‘age of dwelling’ discount which will decrease each year as your home gets older.)

You’ll also want to consider the construction of the house and where you live. If you live on the Atlantic Coast, you’ll want the house to be able to stand up to wind damage, while on the Pacific Coast, you need to keep earthquakes in mind. Home insurance does not cover these perils; instead, you need to buy windstorm or earthquake coverage separately, adding to your insurance cost. (Please note that flood insurance isn’t a covered peril in your home insurance policy either.)

5. Insure your home, not the land

While your home and its contents are at risk from fire, theft, windstorms and other perils, the ground your home sits on is not. Don’t include the value of the land when deciding how much homeowner insurance you need to buy in order to rebuild your house. Your agent can help you assess the right coverage level. (While this is true, if you live in an area of the country where home values are relatively low, you can’t look at your County’s appraised value of your home, take out the land value, and think that the remaining value is what your home should be insured for. You’ll need to consider the actual replacement value of your home which takes into consideration building costs, etc.)

6. Improve security and safety

Items such as dead bolt locks, burglar alarms and smoke detectors can usually bring discounts of 5 percent each, depending on the company. Your insurance company may also offer a significant discount of 15 or 20 percent if you install a sophisticated home-security system. If you’re thinking about buying such a system, check with your insurer to see which systems qualify for a discount. (Having your home monitored for burglar and fire will save you money on your home insurance. That savings may be small when your home is newer since it’s possible that you are maxing out on your discounts – especially the ‘age of dwelling’ discount. It’ll save you even more money when your home gets a little older when that ‘age of dwelling’ discount has diminished.)

7. Stop smoking

Smoking accidents account for almost 23,000 residential fires every year, according to III. Some insurers offer to reduce premiums if no one in the home smokes. (This a discount very few insurance companies offer, but it is available with some of ours.)

8. Look for senior discounts

Retired people stay at home more and spot fires sooner than working people. Older people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you could qualify for as much as a 10 percent discount. But it really depends on the insurer and some companies don’t offer the discount, adds Barry. (As is the case with the discount for non-smokers, we do have a few insurance companies that offer this discount.)

9. Look for group coverage

Large employers and business associations often work out deals with an insurance company, which includes a discount for employees and members. (I’ve only seen this with auto insurance through select employers).

10. Stay with an insurer

If you’ve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce your insurance rates by 5 percent after you stay with them for three to five years; and some companies will discount you as much as 10 percent after six years. (While we’d recommend this when possible, we also understand that rate adjustments have forced our hand to shop for something more affordable over the last few years).

11. Check your coverage annually

You want your policy to reflect the value of your home and belongings. If you review your policy every year, you will be able to make the necessary adjustments. If, for example, you just sold a valuable painting, you won’t need the same amount of personal property coverage. But if you’ve added a garage, you’ll need to increase your dwelling coverage. (This is definitely recommended especially if you’ve made any improvements to your home or purchased any larger items.)

12. Look for private home insurance first

If you live in a high-risk area — one that is especially vulnerable to coastal storms, wildfires or crime — and think you’ll be forced to buy home coverage from your state’s high-risk insurance pool, check first with an independent insurance agent. You may find that you can still buy insurance at a lower price in the private insurance market than from your state’s insurer of last resort. (For those that are insured with the Texas FAIR Plan Association because they were the only market writing new policies at the time you needed one, we might be able to find you something more affordable and that offers better coverage.)

13. Make EFT payments

Many companies now charge $5 or more for mail payments, so having your payments automatically deducted will help shave off excess cost. Often your payments can come automatically from your credit card. (This is absolutely true whether it’s your home or your auto insurance.)

14. Maintain a good credit history

 

Many insurers now check your credit and can adjust your price based on your level of “risk” as judged by your credit history, where allowed by state law. Make sure your credit is in good shape when you apply for policies. (Most of the insurance companies we write with will look at your insurance credit score when determining your final rate. Maintaining a good credit history can save you hundreds of dollars.)

15. Consider actual cash value vs. replacement cost

 

Actual cash value coverage reimburses you for the value of your property at the time of damage or loss, minus your deductible. If you buy this option, you need to account for depreciation of your property, which may result in a lower claim payment than you expect.

Replacement cost coverage reimburses the full value of the item lost — after you purchase the new item and submit your receipts. The up-front premium is higher, but you receive full compensation for your possessions. (We tend to recommend that you have a policy that includes replacement cost coverage. It has nothing to do with higher premiums and everything to do with you not being surprised when you file a claim. However, if you have a lower valued home or are one that likes the idea of self-insuring your home, actual cash value coverage may be a fit for you.)

Make sure to let us see what we can do for you the next time you decide to shop your home or auto insurance around! We’ll provide you with a free, no-hassle quote.

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