Eight Ways to Cut Your Homeowners Insurance Costs
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With the high cost of home insurance as described from previous post, here are some tips that might help you cut your homeowners insurance cost.
1. Equip your home with smoke detectors, deadbolts, and burglar alarms, and tell your insurance company about them. These steps can reduce your homeowners’ premiums by 5% to 20%.
2. If you own a new home, ask about special breaks. Some insurers lower premiums by 5% to 25% for customers whose homes are less than five years old.
3. Raise your annual deductible. Hiking if from the standard $250 to $1,000, for instance, can save you as much as 15% to 20% per year.
4. Check to make sure the facts on your policy statement are correct. If the stated square footage is bigger than your house’s actual square footage, say, or if the policy says your home has wood frame construction when it’s really concrete, you’re being overcharged. Call your insurer to correct the problem.
5. Phone agents representing six insurers to find the cheapest policy with the coverage you want. This advice is especially crucial now that major disasters such as Florida’s Hurricane Andrew have hiked rates as much as 30% over the past few years in some areas. The agents you call can be independents who represent a number of companies, or salesmen who work for a single insurer.
You’re likely to get the best price from a company like American Express or Amica that sells directly through toll-free telephone numbers, because its costs are lower. Your next best bet is likely an insurer such as State Farm or Allstate that sells via its own in-house sales force. Companies represented by independent insurance agents are almost always more expensive, mainly because your premium must cover their commissions.
Don’t sacrifice safety for savings, though. A cheap policy won’t be worth much if your insurer has gone under by the time you need to make a claim. Stick only with an insurer rated A+ or better from the insurance ratings service A.M. Best or AA- from Standard or Poor’s. You can find these reports in most libraries.
6. Don’t pay for floaters you don’t need. If you bought a floater for a $5,000 fur coat you got five years ago, for instance, but have since given the coat to charity, be sure the insurer isn’t still charging you for the coverage.
7. Ask agents about insuring your home and your car with the same company. Some insurers snip homeowners’ premiums by 5% to 15% if you double up this way. But don’t go this route until you check to be sure the insurer’s car insurance premium is fairly priced.
8. Finally, if you have guaranteed replacement cost coverage, keep a close watch over your annual premium adjustments. The company will raise your rates year to keep pace with inflation. If the price hikes are getting too hefty, look for a better deal elsewhere.
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