Everybody hates paying insurance  premiums; it’s a fact of life that people feel insurance costs are too high and you aren’t really getting anything in return.
Well … until you have a theft, fire or other insured peril occur; then suddenly those premiums you’ve been paying can seem like the best investment you’ve ever made!
Still, we all want to get the best deal possible on our homeowner’s insurance policy. And, there is in fact, a lot you can do to lower your premiums!
Insurance companies determine your rates based on how much risk they believe you present; if they see you as more likely to make claims then your premiums will be higher than if they view you as a lower risk client!
Read on to learn how you can lower your home insurance rates.
The Factors that Affect Homeowner’s Insurance Rates
Begin by collecting some basic information about your home; what kind of building materials were used to build your home, how old are the major components such as electrical wiring, plumbing, HVAC equipment and other systems?
All these things affect how much you pay for home insurance. For instance, in areas that are most likely to suffer an earthquake, a home built with brick or other masonry home might be a liability, while in areas more prone to fire, a home made with masonry or stucco siding can be an asset.
Where You Live
The location of your home highly affects your home insurance rates. For example, if you live in Texas, Louisiana or Florida, you are paying the higher premiums in the United States, since insurer’s claims payments arising from hurricane damage in recent years has been astronomical.
And if you live in California, you probably know that getting earthquake coverage is nearly impossible and whatever coverage you can buy probably won’t even replace your home in the event it is destroyed by a major quake!
The neighborhood in which you live can also affect your homeowner’s insurance premiums. Living in an area with high crime rates typically means higher rates, while living close to a fire station sometimes lowers your premiums.
How Much Insurance is Enough?
Studies show that the vast majority of homeowners are underinsured; often not having adequate coverage to replace or rebuild their home in the unfortunate case it is destroyed due to an insured peril.
In still other cases, people are paying far more than needed because they included the value of their land when calculating the replacement cost of their home.
The lesson here is to be sure you have the right amount of insurance, since you may be paying too much or, even worse, you may have inadequate coverage, which puts you at risk when you most need to rely on your home insurance policy!
Personal Articles Floater and Liability Coverage
Many people own personal belongings that are not fully covered by standardized homeowner’s insurance policies. Items such as artwork, collectibles and other highly valued belongings are generally covered but with specified limits.
If you own such items, be sure to have them professionally appraised, document their replacement cost and add a personal articles floater to your standard homeowner’s insurance policy.
If you own a pool, trampoline or other items that are considered “high risk” by your insurance company, you may need to increase your liability coverage. These types of items can increase the cost of coverage by 10% or more.
What’s Your Comfort Level?
In most cases, you can select one of several deductible amounts on your home insurance policy; higher deductibles will lower your premium, while lower deductibles mean higher rates.
While your comfort level is something only you can decide select the highest deductible you feel comfortable you could afford if you needed to make a claim.
The trade off here is that you can save money on your homeowner’s insurance cost if you are willing to accept that it may be uneconomical to make small claims for something like a broken window.
Aside from keeping your home in good condition, making multiple claims for minor problems will typically lead to higher premiums.
It makes common sense to keep your home in good shape, making repairs and replacing major components as needed to avoid big expenses as well as minor home insurance claims!
Review and Compare Your Policy Annually
Review your policy and compare rates prior to your annual renewal. Oftentimes things change and either you need to make adjustments to your coverage or consider changing insurers to get the best rates possible.
If you remove your trampoline, fill in your pool, pay off your mortgage or add a home security system, you may well qualify for lower premiums, so be sure to consider anything material that may have changed since you last renewed.
Paying off your mortgage generally can mean lower rates, since your insurer believes that you are more likely to keep up a home you own outright!
Qualified Allowable Discounts
Be sure you know what items generally qualify for premium discounts. Adding home security features, for instance, can help reduce your home insurance rates.
Things to consider when looking for allowable discounts include:
- Impact-resistant and non-combustible roofs
- Burglar, fire, and smoke alarm systems can lower your premiums by as much as 5%
- Install smoke detectors in an older home could save as much as 10%
- Add fire extinguishers and home security devices
- Age of your home and condition of the premises
- Keep your home insured for the full replacement cost
- Maintain a good claims history over the last three years
- Mark personal property with identifying numbers and inspected
- Place multiple policies with one insurer
- Ask about a senior citizens discount if you are 55 or older
- Maintain an above average credit score