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Save Money On Homeowners Insurance | |
 Homeowners insurance isn't really an insurance that you can decide not to purchase, especially if you have a mortgage, making it mandatory. Mortgage or not, the risks of not having home insurance are far too high. It's always a hope that you will go through life without any losses but you never know when a fire might occur, a break in happen, or a natural disaster strike. So most of us resign ourselves to the high cost of home insurance grumbling all the way. Now's a good time to learn how to save money on your home insurance and reduce your premiums.
Higher Deductibles Mean Lower Premiums
The deductible is the amount of money you are responsible for paying before your insurance will pay a claim. This means if your deductible is a $1000 you have to pay the first $1000 and then your insurance will pay the balance. If the claim was under $1000, you would be responsible for the entire amount and your insurance would pay nothing.
Deductibles start as low as $250 and go up from there. Here are the average savings that you can enjoy.
- $500 - save as much as 12% on your premiums.
- $1,000 - save as much as 24%. on your premiums.
- $2,500 - save as much as 30%. on your premiums.
- $5,000 - save as much as 37%. on your premiums.
Be realistic in choosing your deductible.
Review Your Policy Annually
The value of your home changes as does the value of what you own. Houses generally go up in value and you don't want to be underinsured, which is why you should review your policy annually. This could increase your insurance premium or reduce it.
Let's say you sold that beautiful sculpture that you had insured for an additional $20,000 with a rider. If you remove that rider, your insurance rates will drop. Then again, let's say you bought a beautiful diamond necklace worth $10,000 and you didn't put a rider on it. Then it was stolen and you're out the entire value of the necklace. If you had put a rider on it, the additional cost wouldn't be much and you'd be paid out for your loss.
Security Pays
Many underwriters now offer a substantial discounts if you have a monitored security system with savings up to 20%. There are even smaller discounts for things such as dead bolts or being near a fire hydrant. Ask your agent if they offer discounts for security devices and then ask what those discounts are.
Your Credit Score
Most of the larger insurance providers check your credit score before they quote you a premium. That's because your credit rating affects your rates. The theory is those that are responsible and pay their bills on time are less likely to have a claim because they are responsible. Right or wrong, it's the way it is. If your credit score's a mess, there are some companies that specialize in providing services to those with poor credit scores. Look them up.
Seniors and Disability Discounts
For seniors or for those with a disability status there are usually discounts that range from 5% to 15%. Don't' forget to ask your agent.
Electronic Payments
Many insurers now actually charge more if you don't pay electronically. A $10 charge is initiated if your payments are mailed, where as there is no charge for electronic payments. Ask your agent. It might not be a large amount but it adds up over time.
Actual Cash Value or Replacement Coverage
There are two home owners insurance types - actual cash value and replacement cost coverage. Actual cash value reimburses you for the cost of your property less depreciation. You need to be aware that once depreciation is calculated the payout you receive can be very low.
Replacement cost coverage will reimburse you the full value of the item based on what it would cost for you to purchase it today. You'll pay more for this type of insurance, however should you have a claim the payout is much better. The little bit you saved by choosing actual cash value could really come back to haunt you if you have a large claim.
Here's an example. You have a loss of a computer that is 2 years old. You paid $4000 for it. If you had actual cash value, insurance you would loose 30% for the first year and 10% for the second year for a total of 40% depreciation or $1600 meaning you'll receive a payout of $2400.
If you had replacement coverage, you would be required to get three appraisals. They were $3000, $5500, and $5000. Your insurance company would then divide by the 3 quotes to get the average, which would be $4500 so that's what you would receive. That's $2300 more than you would have received if you had actual cash value. |
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