With the cost of insuring homes on the rise in recent years, now is a good time to examine your policy and look for ways to save money.
The Insurance Information Institute, a non-profit organization supported by the property and casualty insurance business, attributes the increases to the mounting number of catastrophes, the high cost of home repairs, and the emergence of mold claims.
So what can you do to help keep your rates reasonable? The III makes the following suggestions:
Shop for the best deal. Get at least three quotes. See if your state department of insurance has any price comparisons available. But don't just look at prices. Evaluate which companies provide the best customer service and are readily available to answer your questions.
Raise your deductible. The higher your deductible, the less premium you'll have to pay. The III says if you raise a $500 deductible to $1000, you may save as much as 25 percent.
Buy your home and automobile policies from the same insurer. Some companies will reduce your premium up to 15 percent if you have at least two policies from them.
Reduce the odds of being affected by a disaster. Make your home more resistant to disasters - you might be able to save by adding storm shutters and shatter-proof glass or reinforcing your roof. If you live in an older home, you should consider modernizing your heating, plumbing and electrical systems to reduce the risks of water and fire damage.
Understand the costs. The cost to rebuild your home is going to be different than what you paid for it. Don't include the cost of the land in deciding how much coverage to purchase.
Secure your home. Some companies offer a modest discount, usually at least 5 percent, for installing smoke detectors, burglar alarms and dead-bolt locks. Some insurers will also offer a discount if you install a sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. First you'll want to research the costs involved, and whether you'd be saving on your premiums.
Inquire about discounts. Ask your company about all potential discounts. For example, some offer discounts to those 55 and older.
Investigate group coverage. You may be able to get a group coverage plan through your employer or a professional or business group. See if it's a better deal than what you have.
Stay put. Many companies offer discounts for longer-term customers - sometimes up to 10 percent if you've had your policy through the company for more than six years. Be sure to compare prices against other companies once in awhile.
Review your policy and the value of your possessions. If you sold that pair of diamond earrings or other valuable for which you have a floater policy - additional coverage for items not covered by a standard homeowners policy - be sure you're not paying for the extra insurance.
Finally, when you're ready to buy a new home, be sure you factor in the cost of homeowners insurance. The cost of your premium will depend on how much it would cost to rebuild, and whether the house is likely to succumb to a disaster or fire.
Also, flood and earthquake damage are not covered by a standard policy. If you need flood insurance, which costs about $400 per year, you'll want to contact the Federal Emergency Management Agency. Most insurance companies offer a separate earthquake policy.
