The price you pay for your homeowner’s insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from. Here are 5 things to consider when buying homeowners insurance.
Raise your deductible
The higher your deductible, the more money you might save on your premium. Most insurance companies recommend a deductible of at least $500. But if you can afford to raise your deductible to $1,000, you may save as much as 25 percent. Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage, check your policy to make sure.
The land under your house isn’t at risk from theft, windstorm, fire and the other perils covered in your homeowner’s policy. So don’t include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.
Make your home disaster resistant
Find out from your insurance agent representative what steps you can take to make your home more resistant to windstorms, mudslides, earthquake, and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
Maintain a good credit record
Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowners insurance policies. To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.
Improve 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, fire or other monitoring stations. These systems aren’t cheap and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you’d save on premiums.
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.
Links worth looking when shopping around for a homeowners insurance.
A.M. Best (www.ambest.com) Rating company.
Standard & Poor’s (www.standardandpoors.com/ratings) Rating company.
Consumers Advocate (https://www.consumersadvocate.org) Rating company.
National Association of Insurance Commissioners (www.naic.org)
The Federal Emergency Management Agency provides useful information on flood insurance, go to their webpage www.fema.gov/nfip/.
A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area. In California, the California Earthquake Authority (www.earthquakeauthority.com) provides this coverage.