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Twelve Ways to Lower Your
Homeowners Insurance
Insurance is a highly competitive business and the
price you pay for your homeowners insurance can vary by hundreds of
dollars, depending on the insurance company you buy your policy from.
Companies offer several types of discounts, but they don't offer the same
discount or the same amount of discount in all states. That's why you
should ask your agent or company representative about any discounts
available to you. Here are some things to consider when buying homeowners
insurance.
1) Be sure to shop around.
It'll take a few phone calls, but they could save
you a good sum of money. Ask your friends, check the yellow pages or call
your state insurance department (phone numbers are on the back page of
this brochure). Also check consumer guides, insurance agents and
companies. This will give you an idea of price ranges and tell you which
companies or agents have the lowest prices. But don't consider price
alone. The insurer you select should offer both a fair price and excellent
service. Quality service may cost a bit more, but it provides added
conveniences, so talk to a number of insurers to get a feeling for the
type of service they give. Ask them what they would do to lower your
costs. Check the financial ratings of the companies, too. Then, when
you've narrowed the field to three insurers, get price quotes.
2) Raise your deductible.
Deductibles are the amount of money you have to pay
toward a loss before your insurance company starts to pay according to the
terms of your policy. Deductibles on homeowners policies typically start
at $250. By increasing your deductible to $500, you could save up to 12
percent; $1,000, up to 24 percent; $2,500, up to 30 percent; and $5,000,
up to 37 percent, depending, of course, on your insurance company.
3) Buy your home and auto policies from the same
insurer.
Some companies that sell homeowners, auto and
liability coverage will take 5 to 15 percent off your premium if you buy
two or more policies from them.
4) When you buy a home...
Consider how much insuring it will cost. Because a
new home's electrical, heating and plumbing systems and overall structure
are likely to be in better shape than those of an older house, insurers
may offer you a discount of 8 to 15 percent if your house is new. Check
its construction, too. Brick, because of its resistance to wind damage is
better in the East; frame, because of its resistance to earthquake damage,
better in the West. Choosing wisely could cut your premium by 5 to 15
percent. Avoiding areas that are prone to floods can save you $400 or so a
year for flood insurance. Homeowners insurance does not cover
flood-related damage. If you do buy a house in a flood-prone area, you'll
have to buy a flood insurance policy, too. Does your town have full-time
or volunteer fire service? And is your house close to a hydrant or fire
station? The closer your house is to firefighters and their equipment, the
lower your premium will be.
5) Insure your house, not the land.
The land under your house isn't at risk from theft,
windstorm, fire and the other perils covered in your homeowners policy. So
don't include its value in deciding how much homeowners insurance to buy.
If you do, you'll pay a higher premium than you should.
6) Beef up your home security.
You can usually get discounts of at least 5 percent
for a smoke detector, burglar alarm, or dead-bolt locks. Some companies
offer to cut your premium by as much as 15 or 20 percent if you install a
sophisticated sprinkler system and a fire and burglar alarm that rings at
the police station or other monitoring facility. These systems aren't
cheap and not every system qualifies for the discount. Before you buy such
a system, find out what kind your insurer recommends and how much the
device would cost and how much you'd save on premiums.
7) Stop smoking!
Smoking accounts for more than 23,000 residential
fires a year. That's why some insurers offer to reduce premiums if all the
residents in a house don't smoke.
8) Seek out discounts for seniors.
Retired people stay at home more and spot fires
sooner than working people. Retired people have more time for maintaining
their homes, too. If you're at least 55 years old and retired, you may
qualify for a discount of up to 10 percent at some companies.
9) See if you can get group coverage.
Alumni and business associations often work out an
insurance package with an insurance company, which includes a discount for
association members. Ask your association's director if an insurer is
offering a discount on homeowners insurance to you and your fellow
graduates or colleagues.
10) If you stay with an insurer...
If you've kept your coverage with a company for
several years, you may receive special consideration. Several insurers
will reduce their premiums by 5 percent if you stay with them for three to
five years and by 10 percent if you remain a policyholder for six years or
more.
11) Compare the limits in your policy and the value
of your possessions at least once a year.
You want your policy to cover any major purchases or
additions to your home. But you don't want to spend money for coverage you
don't need. If your five-year-old fur coat is no longer worth the $20,000
you paid for it, you'll want to reduce your floater and pocket the
difference.
12) Look for private insurance first.
If you live in a high-risk area --- say, one that is
especially vulnerable to coastal storms, fires, or crime --- and have been
buying your homeowners insurance through a government plan, you should
check with an insurance agent or company representative. You may find that
there are steps you can take that would allow you to buy insurance at a
lower price in the private market. If you have questions about insurance
for any of your possessions, be sure to ask your agent or company
representative when you're shopping around for a policy. For example, if
you're like the steadily increasing number of persons who are running a
business out of your home, be sure to discuss coverage for that business
equipment in the home but only up to $2,500 and they offer no business
liability insurance. Although you want to lower your homeowners insurance
cost, you also want to make certain you have all the coverage you need.
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