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Cheap Home Insurance

Section 5 - Chapter 23

Save On Home Owner's Insurance

Do you need cheap home insurance, or good home insurance? Why not both? Save a hundred dollars here, and a hundred there, and it starts to add up to real money. This is especially true with recurring expenses like insurance. Here are some of the best ways to pay less for home owners insurance while still getting the protection you need.

Get Higher Deductibles

Insurance is for disasters, not small stuff. Plan to pay the first $1000 someday when something happens. In the meantime you'll save money every year on your policy. If you want, you could even put the savings into an account until it reaches that $1,000 mark. That way you'll have the deductible covered, and you can use the saving for other things from that point on.

Ask About Special Discounts

Ask about discounts for security alarms, non-smokers, etc. You can often get a lower rate if your car is insured with the same company as your home, for example. If the agent has a list of possible discounts, look it over to see which ones you might qualify for.

Get Several Quotes

This is the most obvious way to get cheap home insurance. Call several companies, and check online quotes too. Make sure they are quoting the same policy limits, though, so you can honestly compare the quotes.

Make Your Home Disaster Resistant

Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms 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.

Use Independent Agents

An independent agent can sell you policies from whichever companies are cheapest, or best suit your needs. They also are less likely to look out for the bottom line of any particular insurance company, so they may be more willing to help when you have a claim.

Improve 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.

Maintain Your Credit Rating

Establishing a solid credit history can cut your 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. 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.

Check On The Contents Coverage

If you don't really have $40,000 worth of stuff in the house, don't pay for the coverage. In fact, buy only enough coverage for the things you will actually replace if they are lost or stolen. There is no reason to pay to have stuff replaced that is going into your next rummage sale.

Stay With The Same Insurer

If you've kept your coverage with a 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.

Consider Insurance Cost When Buying

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. If you live in the East, consider a brick home because it's more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5 to 15 percent.

Get A Discount When You Are Older

If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

Review Your Policy

Have your policy reviewed and get new quotes every year or so. If you have sold things that were valuable, or can now afford a larger deductible, you may be paying for more coverage than you need.

Flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, you'll need to pay for a flood insurance policy. The Federal Emergency Management Agency (FEMA) provides useful information on flood insurance on its website at www.FloodSmart.gov. A separate earthquake policy is available from most insurance companies. The cost will depend on the likelihood of earthquakes in your area. In California the California Earthquake Authority (www.earthquakeauthority.com) provides this coverage.

If you have questions about insurance for your possessions, ask your agent or company representative when shopping around for a policy. For example, if you run a business out of your home, be sure to discuss coverage for the business. Most homeowners policies cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance. Although you want cheap home insurance, you also want to make certain you have all the coverage you need.

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