Tips to help lower the costs and keep your monthly house payment down
- To start you shop around to different companies in your area for their rates on your particular home. The National Association of Insurance Commissioners (www.naic.org) has information to help you choose an insurer in your state, including complaints. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.
But don't consider price alone. The insurer you select should offer a fair price, deliver quality service if you need to file a claim and should also be financially stable. In assessing service quality, use the complaint information cited above and talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs.
- When you’re buying a home, consider the cost of homeowners insurance. You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home’s electrical, heating and plumbing systems are less than 10 years old. Choosing wisely could cut your premiums by 5 to 15 percent.
You should also check the Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have. CLUE reports are protected by the Fair Credit Reporting Act and can only be accessed by the owner or lender for the property. However, you can request that the current owner of the property order a CLUE report.
- You can also raise your deductible. Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent.
- Don't insure the land your home is built on. The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners 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.
- Try to buy your home and auto policies from the same insurer. You may save from 5 to 15 percent off your premium if you buy two or more policies from the same company. But make sure this combined price is lower than buying different coverage’s from different companies.
- Find out from your insurance agent what steps you can take to make your home more disaster resistant. You may be able to save on your premiums by adding insulation, reinforcing your roof or buying stronger roofing materials. If you purchase an older home you can also consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
- If you 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. Not every system qualifies for a discount! Before you buy find out what kind your insurer recommends, how much the device would cost and how much you'd save on premiums.
- Find out if you qualify for other discounts. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.
- If you keep your coverage with the same company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. But make certain to periodically compare this price with that of other policies.
- Just like when you obtain a mortgage your good credit can help you reduce insurance costs. Insurers are increasingly using credit information to price homeowners insurance policies. In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied.
- Make sure your policy covers any major purchases or additions to your home. But don't spend money for coverage you don't need. If you sell expensive jewelry or your fur coat is no longer worth the $10,000 you paid for it, you'll want to reduce or cancel your fadditional insurance protection and pocket the difference.