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10 Lesser Known Home Insurance Discounts

By JMcHood October 22, 2018

Family
Everyone knows that auto-paying and bundling insurance can save money, but what other home insurance discounts are available?

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Paid-in-Full Discount

If you’re paying for your insurance monthly, you’re paying too much. If you pay your premiums in full, you can save yourself a total of 5 percent after taxes. Switching is easy. Most insurance companies let you make the switch online, or you can phone your agent to switch.

Age-Related Discount

You don’t have to be retirement age to take advantage of age-related discounts. Many insurance companies offer discounts to homeowners aged 50 and older. If you purchased your home while you were in your early twenties, you may be eligible for a better rate after you turn 25.

Good Student Discount

Got a smart kid? Parents are eligible to receive discounts for their children who get good grades (this includes students attending college). The discount varies by insurance company, and most companies ask that kids maintain at least a B average.

Renovation Discount

Planning an update? If so, let your insurance company know. Your insurance company wants you to take good care of your home, and will reward you when you do.

Homeowners Association Membership Discount

Belonging to a homeowner’s association is advantageous because it can reduce your insurance costs. Insurance companies know that homeowner’s associations have rigid rules that require regular home maintenance and care. The result is fewer claims, which is why insurance companies offer discounts for your membership.

Multi-Policy Discount (More than Just Home and Car)

The more policies you bundle together, the greater the savings, and there’s more to bundle than you think: boats, RVs, off-road vehicles, health insurance, vacation homes etc.

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No Claims Discount

If you’ve never made a claim against your insurance, you’re entitled to additional savings. Realtor.com reports: “If you haven’t filed a home insurance claim in the last 10 years you may want to ask about a discount. Homeowners who haven’t made a claim can often get as much as a 20 percent reduction.”

High Credit Score Discount

If you have a low credit score, you may be overpaying for your homeowner’s insurance. The customers with the highest credit scores often receive the best rates, while those with low credit scores are subjected to higher rates. If your credit is less than perfect, it may be time to improve it. Then, contact your agent, and ask him to provide you with a better insurance rate – one that acknowledges your high credit score.

Buy Early and Save Discount

Don’t wait until your policy ends to get an insurance quote. Many insurance companies provide hefty discounts if you switch to a new policy before the first policy expires. If you pay your insurance in full, a portion of those funds (whatever you didn’t use) will be refunded to you.

Home Safety and Security Discounts

Everyone knows a security system can net them some additional savings, but did you also know smoke alarms, strong roofs, and other safety features can save you money? Your home’s safety features make it low-risk, which most insurance companies reward.

Don’t gamble with your financial future. Contact your insurance company, and ask them how you can apply these lesser-known discounts. If they refuse to provide you with additional savings, it may be time to switch to an insurance company that will.

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How Does Credit History Affect Your Insurance Premiums?

By JMcHood September 14, 2018

When you shop for insurance, do you think of how your credit scores might affect your premiums? It’s probably not the first thing you think of because the two do not seem related. They are in a way, though.

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Many insurance companies pull your credit because it helps them determine the risk you pose. Insurance companies aren’t worried about you not paying your premiums – they’ll just cancel your policy if you don’t pay. What they are more concerned about is how likely you are to file a claim. If you file a claim, it hurts the insurance company because they have to pay out. If you are a high-risk of filing a claim, you will probably pay higher insurance premiums.

What’s the Role of Your Credit Score?

Insurance companies don’t take your credit score and then determine your premium. Instead, they look at your credit history. They want to know the following:

  • Your pattern of paying bills – Do you pay your bills on time?
  • How long is your credit history?
  • How much of your available credit do you have outstanding?
  • Do you have collections?
  • Are there a lot of recent inquiries?

The insurance company then uses these factors to determine your riskiness. If you pay your bills late, have a lot of outstanding credit, and have multiple collection accounts, you may be seen as ‘irresponsible.’ This may not affect the way you drive or the way you care for your home, but it’s the feeling the insurance company gets. Chances are that you will pay a higher premium if your situation looks like that.

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If, on the other hand, you pay your bills on time, you don’t have any collections, you barely charge your credit cards, and you have a long credit history, you may get lower premiums because you look as if you are a lower risk.

Other Factors That Play a Role

Your credit score/credit history aren’t the only factors that play a role here. Insurance companies will also look at your insurance history. Do you file a lot of claims? Do you have a bad driving record? Is your home located in a high-risk area? These factors play a role in how the insurance company determines your premium.

The insurance company puts all of the factors together to determine the premiums you will pay. The higher risk you pose for the insurance company, the higher the premiums you will pay. If you are a pretty low-risk type consumer, though, you may enjoy those low premiums.

When you apply for insurance, no matter the type, you should give your credit report a once over. Look to see if you have any negative information on there that you can fix. For example, if you have late payments, bring them current. If you overextended your credit, pay some of it off and don’t use your credit cards again.

The less risk you show an insurance company, the less they will charge you for premiums. You can then save that money for the deductibles you will face should you have to file a claim in the future.

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Are There any Differences Between Condo Insurance and Homeowners Insurance?

By JMcHood September 7, 2018

If you buy a condo, you have different insurance needs than the person that buys a house. While they are both places to live, they have completely different circumstances.

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When you buy a house, you are responsible for the interior and exterior of the home. If something breaks or needs replacement, it’s on you. When you buy a condo, though, you are only responsible for the interior of the building. The exterior is a part of the ‘common areas’ and is handled by the association. If something breaks or needs replacing on the exterior of the unit, you are not responsible.

The common areas that the condo development has isn’t only managed by the association, but also insured by them. In other words, you only need to insure the interior of your building when you buy a condo.

How Much Dwelling Coverage do You Need?

Your dwelling coverage is what covers you should your home or condo be completely destroyed. If you own a house, you will need enough dwelling coverage to rebuild the interior and exterior of your home. The dwelling coverage should also include any extras, such as fences, sheds, or detached garages.

If you own a condo, you only need enough dwelling coverage to reconstruct your unit’s interior. It’s up to the association’s insurance policy to cover the costs of rebuilding the exterior portions of the building. You may also want to check with your association to see if their policy includes any coverage for the interior of your unit(s). Some policies do cover a portion of it, which would decrease the amount of dwelling coverage you need.

How Much Liability Coverage do You Need?

Liability coverage is like a blanket policy. It protects you against bad things that happen to you even while not at your home or condo. For example, if you hurt someone (not intentionally) while away from your home and the sue you, your homeowner’s insurance or condo insurance may cover you. Of course, liability coverage also covers accidents that occur on your property. If you own a condo, you’ll need enough liability coverage to cover anything that could happen inside your unit. Anything that happens outside of your unit, such as a slip and fall, would go under the condo association’s liability coverage.

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If you own a home, though, you’ll want enough liability protection to cover both the interior and exterior of the home. Extra attention should be paid to this coverage if you have a pool, trampoline, or any other ‘dangerous’ activity on your land that someone could potentially hurt themselves on. If you have any of these, you may want to increase your liability coverage.

How Much Personal Property Coverage do You Need?

Personal property coverage is the one area that both homeowners and condo owners will need a similar amount on. The actual coverage you need depends on your personal belongings. Do you have expensive jewelry or antiques? Think about your clothing, electronics, and other precious belongings. Anything that is expensive to replace, should be considered a part of this insurance.

Keep in mind that many insurance policies have limits on their personal belongings coverage. For example, if you have a very expensive ring, its full value may not be insured under your general personal liability coverage. Instead, you may need to add a rider to the policy that covers the cost of the ring. The same is true for any other ‘expensive’ belonging you have that you are trying to insure.

The best thing to do is talk to your insurance agent. Ask him about the types of coverage you need and what the different options are that you have at your disposal. You don’t want to pay for insurance that you don’t need, but you also don’t want to under insure yourself and put yourself in a bad financial situation. Shopping around with different insurance agents will give you a better idea of what types of coverage you need in your home or condo.

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What Does “Replacement Cost” Mean?

By JMcHood September 3, 2018

When you buy insurance, you have two options when it comes to the type of coverage you can obtain. The insurance company will ask you if you want replacement cost or cash value coverage. You might not think this is a big deal since you are choosing the amount of coverage to buy, but it holds great importance. You won’t notice the difference until you have to make a claim on your insurance. Of course, this is the time you want the insurance coverage that will cover your loss as much as possible.

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Keep reading to learn the difference between the two terms.

Replacement Cost Coverage Defined

If you have a claim/loss, you will need to replace the damaged or lost items. Normally, an insurance company would reimburse you the amount of money you paid for the item. If it’s something you bought many years ago, it could cost a lot more money today to replace it.

This is where replacement cost coverage comes into play. This coverage helps you replace the items at today’s cost without any money required from you. This, of course, only works if you actually replace the items. If you decide to go without or not repair the damage, this coverage won’t help you.

Here’s how it works:

You claim a loss, say in a house fire. You claim the loss of your furniture. The insurance company pays you the cash value of the furniture today, considering the depreciation it took since you bought it. When you go to replace the furniture, you can file with the insurance company to receive further compensation to cover the full cost of the replacement.

Keep in mind, that the insurance company has the final say regarding whether they will repair or replace your item. Even though you claim damage, the insurance company will determine which method is the most cost-effective. If they feel the item can be repaired, they may opt for this option since it will likely be less costly for them.

Actual Cash Value Coverage Defined

If you opt for actual cash value coverage, you agree to receive the ‘actual value’ of the items at the time of the loss. This will be less than what you paid for the item. The main difference you should be aware of is the money you will receive. With actual cash value, you probably won’t receive enough compensation to cover the cost of replacing the item. You can consider it reimbursement, but you may have to put some of your own cash into the replacement of the item, if you choose to do so.

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Using YourReplacement Cost Coverage

If you purchase replacement cost coverage, you should be prepared to provide the insurance company with proof of the item. This may include any of the following:

  • Proof of purchase including the cost
  • The value of the item today if you were to buy it today
  • Picture proof of ownership of the items

These rules mainly pertain to big-ticket items. For example, you don’t have to keep receipts for every book you buy or every piece of clothing. But you would need receipts for a television, furniture, or computer that you claim as a loss.

It’s important to talk to your insurance agent about both types of coverage. Go over your assets and determine if replacement cost coverage makes more sense. Do you want the reassurance that you can replace your items no matter their cost today? Would you rather take a gamble and at the very least, receive compensation for the item minus depreciation? Think long and hard about the decision, going over the different premiums and benefits to help you make your decision.

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Insurance Tips for First Time Homeowners

By JMcHood August 27, 2018

Buying your first home is exciting, but it also comes with a lot of responsibility. If you take out a mortgage to buy the home, the mortgage company will require that you carry homeowner’s insurance. Before you just call any insurance company and take what they have to offer, learn the important tips you should use to help you make the most of your policy.

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Insurance Companies Look at Your Past

Even though you’ve never owned a home before, insurance companies are going to look at your insurance history. Maybe you had renter’s insurance or car insurance. Did you make a lot of claims on those policies? If so, you may be considered a high-risk for claims. This will prevent you from getting the claim-free discount. It could also prevent certain insurance companies from insuring your home at all.

You Need to Know if the Home is in a Flood Zone

Homeowner’s insurance doesn’t cover flood damages. Your lender will likely require a flood certification on the property to determine if you are at risk for flooding. If the home is located in a flood zone, you will be required to purchase flood insurance, which is separate from homeowner’s insurance. You’ll pay a separate premium and possibly even have a separate insurance company that will cover flood damages.

If the home is in a flood zone, make sure you know exactly what your insurance company will cover. If there are any damages that they can tie into the flood, chances are your homeowner’s insurance won’t cover it. Knowing this ahead of time can help prevent an unpleasant surprise should you have to file a claim.

Don’t Take the Cheapest Offer

It might seem like it makes sense to buy the cheapest insurance policy available. After all, who doesn’t like to save money each month, right? But this can hurt you in the end. Rather than focusing on just the premiums, look at what the coverage offers.

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Do you have enough dwelling protection? Do you have replacement cost coverage? Is there a separate rider for your personal belongings? Do you need additional riders for luxurious personal belongings, such as jewelry? Do you have enough coverage if someone were to get hurt on your property?

These are the factors you should focus on alongside the premiums. It makes sense to choose the lower premiums between the policies that offer the right coverage. Just don’t make the mistake of focusing on premiums alone.

Your Credit Score May Matter

You know your credit score mattered when you applied for a home loan, but it may also affect your homeowner’s insurance rates too. Some insurance providers pull your credit. They want to know what type of financial risk you pose.

Do you pay your bills on time? Do you use your available credit responsibly? These are things the insurance company will look at before they determine your premium. The lower your credit score is or the more ‘bad’ credit you have on your report, the higher the premium an insurance company may charge you.

Bundle Your Insurance

One of the best things you can do is use the same insurance company for multiple policies. For example, if you have a car, use the same agent for your car and homeowner’s insurance. These two policies bundled together often offer the highest discount. Check with your insurance agent, though, because some companies offer bundling discounts for other policies as well.

The key is to shop around, make sure you get proper coverage, and that you get premiums that you can afford. Also, pay attention to the deductibles. If you end up making a claim, you want a deductible that you can afford, not one that will make you feel financially stressed. Once you put all of the pieces together, you can get the right insurance policy for your first home.

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Should you Buy a Separate Flood and/or Earthquake Insurance Policy?

By JMcHood August 8, 2018

You buy homeowner’s insurance and you think everything is covered. Did you know that many policies don’t include coverage for flood or earthquake damages, though? Too many people find out the hard way, after they experience destruction. The last thing you want in the face of destruction is to find out that your coverage isn’t what you thought. Instead, you may want to buy separate policies or even riders to make sure you have protection.

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Who Needs Flood Insurance?

Floods are one of the most costly disasters that can occur to a home. While FEMA does have a flood zone map depicting the high-risk areas, even homes not in a high-risk area can experience flooding. If your home is located in a flood zone, you have no choice but to buy flood insurance. Your mortgage lender will require it.

If you aren’t located in a flood zone, it could be a good idea to carry coverage anyways. If you don’t have to use it, consider yourself lucky. If you do experience a flood, though, you won’t have to face the financial destruction that often comes along with flood damage.

If you think you will receive reimbursement from the federal disaster funds. While you may get some help, it’s usually in the form of a loan from the SBA. In other words, it’s not reimbursement, but rather a loan that you must pay back. The government just gives you the financial assistance necessary to get through the troubling time.

What Does Flood Insurance Cover?

Flood insurance typically covers flood damages that occur from a naturally occurring source and that affects at least two properties. Typically flood insurance will cover your home up to $250,000. If you purchase a rider to cover your personal belongings (which aren’t covered under standard flood insurance), you may receive up to $100,000 in coverage.

Who Needs Earthquake Insurance?

Even the best homeowner’s insurance policy won’t cover earthquake damages. You must buy a separate policy or add a rider/endorsement to your current policy for earthquake damages. If you live on the west coast, earthquake insurance is almost a necessity. Even if you don’t, though, you may be surprised to learn that you should carry earthquake coverage too.

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Because earthquake insurance can be costly, many homeowners don’t buy it. You may find the typical policy to run as much as 10% of your property’s value. At the very least, though, those living on the west coast should have some type of coverage.

What Does Earthquake Insurance Cover?

Earthquake insurance covers damages to your home, belongings, and additional living expenses, if you are displaced from your home. As is the case with any insurance, your coverage should cover the reasonable costs that occur as a result of your loss.

Care should be taken, though, as earthquake insurance does have loopholes. For example, if a fire starts in your home as a result of the earthquake, your homeowner’s insurance should cover that rather than the earthquake insurance. Earthquake insurance also doesn’t cover all of your personal belongings. The most commonly excluded items include:

  • Cars
  • Expensive belongings, such as jewelry or antiques
  • Fences
  • Pools

In addition, any water damage that occurs as a result of the earthquake won’t be covered. You would need a flood policy to cover it.

As you can see earthquake and flood insurance tend to go hand-in-hand. If you need earthquake insurance, you should probably consider flood insurance as well. If you need flood insurance, it’s up to you if you want to buy earthquake insurance too. Just know that your regular homeowner’s insurance will not cover damages from either issue.

It’s a good idea to review your coverage from time-to-time. This gives you a chance to reassess your needs. If the dynamic of your area changes a lot, you may find that flood or earthquake insurance is suddenly a necessity.

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