How To: Lower The Cost of Homeowners Insurance

In the age of super-consumerism, everyone is looking to make the most of their money.  Insurance is no exception, so here are some valuable tips to keep in mind when purchasing or renewing your insurance :

• Raising Your Deductible – Basically, your deductible is the “skin” you have in the game, or the amount you will need to pay when your claim is finalized! The higher your deductible, the lower your premium. This allows you to use  your insurance as protection against larger losses, the nature of which you can’t possibly pay on your own. You must determine how much of a loss you can comfortably retain. Similarly, if you live in an area susceptible to a flood, windstorm, earthquake or the like, your policy might contain multiple deductibles. We recommend that you review these with your agent on a yearly basis.

• Don’t Confuse Market Value With The Cost To Rebuild-Keep in mind that the land on which your home is built, is not at risk for damages due to fire, windstorm, earthquake or theft.  Therefore, the value of land shouldn’t be included in the value of your home and need not be calculated in the cost to rebuild. Keep in mind that the higher the values, the greater the cost.

•  The 80% Rule-You must insure to at least 80% of your home’s total replacement cost for an insurance company to fully cover the cost of damages to your home from an insured event. For instance, if it costs $500,000 to rebuild, you must insure for a minimum of $400,000 regardless of whether you suffer a complete loss to the home or even a partial loss. If not, you run the risk of becoming a co-insurer and will have to come up with additional monies over and above your deductible amount. Since capital improvements such as additions and alterations can increase your home’s value, be sure to let your agent know of any improvements   that could increase the replacement value of your home.

• Purchase All Your Policies from One Carrier-This strategy assists you in getting a bigger bang for your buck and  ensures you are getting discounts on all your policies. Often you can “bundle” your homeowners, auto and umbrella policies to take advantage of discounted premiums you wouldn’t otherwise get with individual policies.

• Improve Your Resistance To Loss & Improve Home Security-Such losses ranging from roof damage to slips and falls on cracked sidewalks can easily be avoided by checking your home for defects at least every six months. Attention to brick work, concrete, leaders and gutters, downspouts, shutters, railings, stairways, roof shingles, wiring, boilers, heating and air-conditioning are just a few of the areas you will want to check for any needed repairs. We strongly recommend that you check to make sure smoke and carbon dioxide detectors, fire and burglar alarms are always in good working order. Most carriers provide discounts for any devices that are installed to prevent loss.

• Pay Your Bills On Time-A good credit record can be a significant asset in underwriting and  ensuring the best pricing from your insurance carrier. We also recommend you check your credit report on an annual basis to identify any errors that may appear.

At a time when every dollar counts, these simple suggestions can really make a difference!

By Karen Skoler, CPCU