\In recent years, homeowners have seen their share of natural disasters taking a drastic toll on not just their homes and land, but their pocketbooks as well. According to a study by the Independent Insurance Agents and Brokers Association, more than 51 million homeowners saw their premiums increase between 2001 and 2003, and that doesn’t include the victims of Hurricane Katrina! If you want to keep your costs low, here’s some tips to keeping costs low.
1. First and foremost, shop multiple companies. It’s important to compare policies and get breakdowns of coverage. It’s also ok to ask insurance agents to compare their company to another company in terms of claims granted, provisions of the insurance, and how often customers were dropped from their policies. Look carefully for the phrase “true replacement value” as that is key in choosing the right policy – you don’t want to be left holding the bag on a $100,000 loan when the insurer you chose decides to only pay 40 percent of a home’s value. Also, look for the highest values on personal property – some policies seem the same, but some will have a $15,000 personal property coverage and others will have $25,000.
2. Keep your deductible high. A deductible of at least $1,000 is a must. If you can find an insurer that will take it to $1,500, do that. These seem like high numbers at first, but when you consider they can lower your premium by hundreds of dollars over a year, you will win out in the long run by paying less.
3. Maintain your home. Though that pesky leak in the basement or a loose board may seem trifling, they are often indicators of other problems. When you think about large purchases such as cars or boats, consider first your house. Does it need a new roof? Water heater? Electrical system overhaul? Plumbing overhaul? Deck work? Driveway? Garage Door? Keeping up with preventive maintenance will lengthen the life of your home and cause you fewer headaches that require you to use your insurance.
4. Don’t file minor claims. If your deductible is $1,000 and you need $1,270 worth of repairs from a faulty fuse, don’t file the claim. Simply pay the $1,270 and get the work done. You will still have to pay the full amount anyway, but by not having it hit on your insurance, it won’t count against you. Several small claims – even valid ones – can get your premiums dramatically increased and even see you dropped from the policy.
5. Keep an eye on your credit. Unfortunately, insurance companies have decided that a high credit rating is synonymous with a safe, secure homeowner. Periodically order a copy of your credit file in order to correct orders and see how you are doing. Pay down debts one at a time, but leave the credit open. Low balances and a fair amount of credit amount to a high score.
6. Install a monitored security system. Make sure you include monitoring of fire/smoke alarms as well. Insurance companies will take up to 10 percent off in some cases when the alarm company supplies them with a monitoring certificate. Further, you’ll have peace of mind that while you are out, someone else is keeping an eye on the house.
7. Keep your policy current. If you make additions to your house, make sure they are counted and insured. Further, if you have an addition that was removed, work toward reducing your coverage.
With just a little due diligence, you can lower the cost of homeowner’s insurance and maximize your useable income. Remember – owning a home can be expensive, but with the right tools, you can keep your costs low.