How can I lower my homeowner insurance premium?

Insurers frequently award lower rates to homeowners who guard against theft, accidents and other losses. And companies may provide discounts to premium for multiple customers (home and auto). Here are some things you can do that generally qualify for lower premiums:

  • Secure your home with dead bolts and window locks.
  • Install a security system with outside signal and connection to local police.
  • Install and maintain smoke detectors.
  • Install a sprinkler system for fire.
  • Install a fire alarm that automatically alerts the local fire department.
  • Purchase your auto and home insurance from the same company.

 

What kinds of records are needed to substantiate a homeowner claim?

It is recommended that you keep a booklet detailing the items or a videotape of your personal property. Having a complete inventory record at the time of loss could save you thousands of dollars because no one remembers everything, and unless written down, lost items will go unclaimed. The booklet should be kept in a safe place, preferably not at home. Keep it in a safe deposit box or with your insurance agent. It is also a good idea to retain all bills for major purchases and additions to the structure of your home. These could serve as proof of purchase in the event of a claim and should also be kept in a safe place. Finally, take pictures of or videotape all these items. Lay china and silverware on a table so that the picture will show the number of pieces and other details such as the design. Keep the pictures and all receipts in a safe place.

 

How does the location of the home impact my insurance premiums?

Some areas have more crime than others. Weather can be a greater concern in some areas. Access to water (in the event of a fire) can be a concern. Insurance companies use statistics to weigh out the risks for a location and determine a cost associated with it.

Some wonder why their home insurance keeps going up if they haven’t had any losses. This is because insurance is based on the concept of pooling all policy holder money together and using these funds when a claim is paid out. There are several factors that have been impacting rates.

  • Weather has been a key factor. Weather related losses have been rising every year in both severity and frequency. This has resulted in far more significant home claims. If there are a lot of losses in an area, this will impact everyone’s insurance cost. In recent years there have been very large losses happening across the United States. Everyone is impacted by these weather events.
  • When a large weather loss event occurs the supply and demand go up. When a large hailstorm happens, there are many people in need of repairs. This will then create an inflated cost for repairs. Material and labor costs will both go up in that area. The result is that the insurance company is paying a much higher cost and that is then passed on in our insurance cost.
  • Credit – Your insurance score has gone down and this will make your insurance premium go up. Insurance companies believe that your credit score is a predictor of your likelihood that you would file a claim.

 

Are all homeowner policies the same?

No, they are not all the same. All home policies will at least meet a minimum amount of coverage, but there can be very big differences from company to company. Most people when comparing companies look mainly at the value of the home and the deductible. The tough part about homeowner insurance is that the differences can be in the fine print. What coverage should you ask about? Here is a list of coverages that may be additional cost, included or not available at all. When obtaining a quote, they should be asked about to determine if they are included.

Guaranteed Replacement Cost on the Dwelling

  • This coverage used to be pretty standard with a homeowner policy. Today, many companies are no longer automatically offering it. This coverage will guarantee that your insurance company will pay whatever the cost is for rebuilding your home if it was completely destroyed even if it is more money than your home was insured at.

Replacement Cost on Personal Property

  • This coverage would pay the amount to actually replace your property at current market. If you have a 50-inch TV and it is five years old, they would settle the claim based on the cost for a brand new 50-inch TV.

Sewer Back Up

  • This coverage is defined as water that rises in your home from drains or plumbing fixtures (such as sinks or toilets). It is normally excluded on a home policy but many companies offer it at an additional cost.

Earthquake Coverage

  • This includes earth movement. This is normally an add-on to a policy and not automatically included.

Ordinance of Law

  • This will take into account changes in building codes. If your municipality had changes in their code, they may require that these changes be adhered to when a home is being repaired. This can be costly for a homeowner if they do not have this coverage.

Identity Theft

  • Identity Theft is on the rise and it can be both expensive and time consuming to deal with. This coverage provides assistance with correcting the records.

Loss Assessment

  • This can be really important for a homeowner that is part of a home association. If the home association has a covered loss and they assess all members a part of that loss, this coverage will take care of this.

Other Structures

  • This provides coverage for any structure that is not attached to your house (such as a detached garage, shed or fence).

Loss of Use

  • Loss of use is the coverage that is used to pay for all the additional expense associated with having to live somewhere else due to a covered loss. If you are not able to live in your home while it is being repaired, you will have many additional expenses. This coverage can pay for things like rent, electric, transportation and storage. When considering a home policy, these coverages should all be considered and discussed. They can make a big difference in your claim result.