One of the necessary expenses involved in owning your home is insuring it. All homeowners should have it. If they don’t they’re playing a very dangerous game. Why run the risk of not insuring one of the largest investments you’ll ever make in your life. One catastrophic loss and it’s gone.
In the process of buying insurance, we’d like to help you get the most for your money and save whenever possible. We all work very hard to earn money, let’s not give away more than we have to. Here are a few tips that will help you to save money on your homeowner’s policy:
- Know the difference: It is very important to know the difference between a ‘named peril’ policy vs. ‘all risk’. A named peril is more restrictive as a loss has to occur by one of the perils named in the policy. Conversely, an all-risk policy is covered for all risks except for those occurrences excluded by the policy terms and conditions. All risk policies encompass more causes of loss than a named peril policy and thus will cost more. The cost, in my opinion, is worth it. If you can afford it, buy an all risk policy.
- Higher deductibles: If you currently have a $100 or $250 deductible, depending on the regulations in your state, you could possibly save anywhere from 5% to 25% on your annual premium by increasing the deductibles to as much as $1,000 per occurrence. Discuss the optimal deductible/premium savings possibilities with your insurance agent.
- Buy more than one policy from the same insurer: Enjoy the multi-policy discount that insurance companies offer. If you buy at least two lines of coverage from the same insurance company you may realize a discount of anywhere from 5 to 15%.
- Location, location, location: If you purchase a home in a flood zone, you will be required to buy Federal Flood Insurance. Also the closer your house is to a firehouse the lower your premium. Difficulty in getting to your house in the event of a fire is taken into consideration when determining risk and calculating premium.
- Do not include the land when valuing your house for insurance: The land your house sits on will not be damaged in the event of a windstorm, fire, theft or other policy peril covered under your policy. Therefore, including the land value will only increase your insurance premium unnecessarily.
- Protect your home: By installing a sprinkler system and/or security system, you may earn a premium discount of at least 5%. Call your insurance carrier for recommendations before you install your system. Let’s face it, they have a stake in the safety of your house and probably have first hand experience of the effectiveness of various systems.
- Smoke Detectors: These devices are mandatory in some states, but if it’s not mandatory in your state, buy one anyway. They’re cheap and they save lives and will help to lower your premium (some carriers will not provide insurance if the house is not equipped with a smoke detector).
- Quit Smoking: Smoking is the leading cause of fire related deaths. Households with non smokers pay a lower premium than those with smokers.
- Senior Discount: If you are retired and at least 55 years old, there is a possibility that your insurance company may offer a senior discount.
- Longevity of relationship: Develop a long term relationship with your insurance company: Several companies offer discounts based on the number of years you’ve been with them. This may earn you anywhere from 5 to 10%.
- Group Coverage: In the world of insurance, group usually means cheaper. Check to see if there is an association you can join, such as an alumni or business association, where discounts are offered to association members.
- Shop Around: This is the most important piece of advice I can offer. Get quotes from several companies. Once you have the quotes, line them up side by side and compare. Do you homework about the insurance companies also. There’s no sense in having a great policy for a low premium and find out right as your house is burning to the ground that the insurance company is out of business. A.M. Best Company, a company that has been rating the financial condition of insurance companies since 1899, makes it easy to determine the solvency of your insurance company.
The internet has made it much easier to become educated on topic of insurance and be a savvy buyer. Do your research before you buy.