With all the media attention on health care plans, and all the TV ads with animated animals trying to sell auto insurance, it’s easy to overlook homeowners insurance altogether. The reality, however, is that this insurance is just as vital as any other kind, and tends to be the most expensive.
There are, however, several ways to cut the cost of your homeowners insurance. Here are eight of them:
- Increase Your Deductible: Your deductible is inversely proportional to your insurance premium, so the lower your monthly deductible is, the higher your monthly payments will be. If you have enough money saved (or credit available) to handle small claims on your house, and your deductible is currently under $1,000, consider raising it – you could lower your premium by up to 25%.
- Bundle Your Policies: By purchasing your homeowners and auto insurance policies from the same company, you could save between 5 and 15% on your premiums, but bundling isn’t always the best plan, so be sure to comparison shop, first.
- Don’t Buy Unnecessary Coverage: There is very little point – and a lot of excess expense – in buying coverage you won’t actually use. A special jewelry rider isn’t needed if you don’t own many expensive pieces, and if you don’t live in a place where earthquakes typically occur, special earthquake policies are essentially useless. On the other hand, you should make sure your home carries enough coverage to replace it if it is damaged beyond the ability to repair.
- Be Proactive:. You can sometimes reduce your insurance expense by taking action to make your home a better insurance risk. Consider adding a monitored burglar alarm, retro-fitting your heating or electrical systems, or adding external lighting. In addition to adding features to make your home more insurable, you can also take steps to reduce risk by not owning certain "high risk" dog breeds (Pit Bulls, Rottweilers, and Doberman Pinschers, for example), not putting a trampoline in your back yard, and making sure your swimming pool is surrounded by a security fence.
- Be Informed: Make it a point to review your policy once a year, not only so that you understand exactly what is or isn’t covered, but also in case something has changed in your life. You’ll want to ensure that any home improvements are covered, and that if you purchase new electronics, or other "big ticket" items, they’re itemized, and covered by a special rider, if need be.
- Improve or Maintain Your Credit Score: Insurance companies use your credit score to predict whether or not clients are likely to actually make their payments, as well as to set their pricing. If your credit score is already good, it’s important to maintain it. If you have credit that’s less than stellar, take steps to improve it by keeping your credit card balances low, and always making payments on time.
- Comparisons Count: As the song goes, "You’d better shop around." Always get quotes from three different companies when shopping for a new policy, but be sure to speak with your existing insurance agent, as well. You may qualify for discounts you weren’t aware of, like a 5-10% reduction in your premium if you’ve been with the same company for three or more years, or special pricing if you work in certain fields, or belong to certain clubs or organizations. Your last question, before signing anything, should always be "What other discounts apply to me?"
It’s no secret that homeowners insurance is a significant expense, but by ours suggestions you can significantly reduce how much you pay in premiums.