Ten Ways To Cut the Cost of Your Homeowner's Insurance

Have you noticed that the cost of your homeowner's insurance coverage
has increased significantly over the last several years? Policies that
cost $325 just a couple of years ago are often two to three times that
amount now, putting the squeeze on many homeowners' budgets. Here are
ten ways to minimize the cost of your homeowner's insurance.

1. Raise Your Homeowner's Insurance Deductible
   

   Your deductible is the amount of risk you agree to accept before the
   insurance company starts paying on a claim. With the cost of
   homeowner's insurance escalating, it no longer makes sense to let the
   insurance company assume all the risk. If you have a low deductible of
   $50 to $100, consider raising it to at least $500 to $1,000. You could
   save up to 25% on your premiums.

   
   Some companies are offering deductibles equal to 1% of the insured
   value of your home ($1,000 deductible on a $100,000 home). It that
   seems like a lot of money to pay in the event of a claim, consider
   this: the trends in homeowner's insurance are for insurance companies
   to severely penalize customers who file one or more small claims. Often
   the premiums are jacked way up or the policy is cancelled, and when the
   customer looks elsewhere for coverage, they may find it costs them
   three times what they were paying. We should change our perception that
   insurance of any type is intended to cover all of our expenses when we
   incur a claim. Those days are over. Think of insurance as risk sharing.
   How much risk are you willing to assume?

   
   

2. Combine Your Homeowner's Insurance and Auto Insurance Policies
   

   
   Consider buying your homeowner's and auto insurance policies from a
   company that offers both. Some companies offer discounts of 5 to 15% if
   you buy both types of coverage from them. Check around and make sure
   the price is lower than buying the two policies from two different
   companies before making this move.
   

   
   

3. Ask About Other Homeowner's Insurance Discounts
   

   Make sure you're receiving all the discounts for which you're
   eligible. For example, discounts exist for smoke detectors, deadbolt
   locks, security or fire alarm systems, fire extinguishers in the home,
   etc. If you're over 55 and retired, you may qualify for an additional
   10% discount.
   

   
   

4. Don't Buy Homeowners's Insurance Coverage You Don't Need
   

   It makes no sense to buy insurance to protect yourself against risks
   you are unlikely to encounter; for example, earthquake coverage in a
   non-earthquake zone, or a jewelry floater to your policy if you don't
   own expensive jewelry.
   

   
   

5. Make Your Home a Better Insurance Risk
   

   Ask your insurance agent what you can do to make your home less
   expensive to insure. Making changes that reduce the risk of damage in
   windstorms and other natural disasters is one example. Another is
   updating old wiring or heating systems, which may reduce your risk of
   fires and therefore reduce your premiums.
   

   
   

6. Know What Your Homeowner's Insurance Policy Covers
   

   Your home is your biggest investment. Make sure it's adequately
   protected from risks you cannot afford to cover yourself and that it
   covers any home improvements you've made, major purchases, and
   increased costs of rebuilding.
   

   
   

7. Keep Your Insurance Coverages Up To Date
   

   Once a year, before your homeowner's insurance policy is due to
   renew, dig out the current policy, read through all the details, and
   call your insurance agent to discuss any changes in your situation that
   occurred during the year.

   
   
   

8. Avoid Risks That Insurers Shun
   

   
   Insurers are shying away from some risks. For instance, owning certain
   types of dogs (Rottweilers, Doberman Pinschers, Pit Bulls), can limit
   or void your policy. Owning a swimming pool or a trampoline can
   increase your cost of coverage. Read all the fine print in your policy
   under the "Conditions and Coverages" sections so you know all the
   things that are excluded from coverage. You may opt to buy additional
   coverage to protect yourself from certain exposures.
   

   
   

9. Improve Your Credit Score
   

   Insurance companies are increasingly using credit information to
   price insurance policies. Don't have too many open credit accounts,
   don't charge close to the limits on your credit cards, and pay all your
   bills on time to keep your credit score healthy.
   

   
   
   

10. Shop Around for Homeowner's Insurance
    

    Shop around for homeowner's insurance rates but keep in mind that
    you may be receiving a longevity discount if you've been with your
    current insurer for several years. Typical discounts are 5% if you've
    been with the company for three to five years, and 10% for six years or
    more. Get quotes from three agents, and take any longevity discounts
    with your current insurer into consideration when you compare prices.
    Your state insurance department may have rate comparison information
    available for your state. See www.consumeraction.gov/insurance.shtml.
    Before you switch insurers, heck out their financial health at
    www.ambest.com or www.standardandpoor.com.