Saving On Your Homeowners Insurance

As with any insurance purchase, it is important to evaluate coverage and research your options to find the best coverage for your dollar. Here are some tips from the National Association of Insurance Commissioners (NAIC) to help you save money on your homeowners insurance.

Shop Around

Homeowners insurance can be costly, but it is necessary. The premiums charged for homeowners insurance can vary widely from company to company, so it pays to take the time and effort to shop around to get the best value for your insurance dollar.  The cost of homeowners insurance depends on a number of factors including location, age and type of building, the use of the building (i.e. residence and/or commercial enterprise), local fire protection, choice of deductibles, application of discounts, and the scope and amount of insurance coverage you purchase.

Stick With the Company That Offers the Best Deal

Once you have considered all of the alternatives and have chosen the company that fits your needs, consider multiple policies with that company.

Change Your Deductible

In choosing the deductible amount, you bear the burden of loss up to the  amount you feel you can afford. Deductibles save money because the first dollars of the insurance are the most expensive to buy. Contact your insurance company to see if they offer higher deductibles, such as $500 or $1,000 on your homeowners insurance coverage.

Pay Attention to Rebuilding Costs Versus Actual Land Value of the Home

Consider the home and its contents when pricing the value of a Homeowners Insurance policy, not the land beneath the home. The property itself is not at risk of theft, fire or other hazards covered under your homeowners policy. Adding the land value could increase your premiums.

Discount Opportunities

You should also check with your insurance company to see if they offer premium discounts for the use of dead-bolt locks, smoke alarms, fire extinguishers, sprinkle systems and security systems.

Build a History with the Same Insurer

If coverage remains with the same insurer for 3-5 years, some companies offer up to a 5% discount plan for these long term consumers. After 6 years of coverage, a consumer may find up to a 10% discount. It is important to periodically compare the price with other policies, but the history benefits may be enough to reduce the premiums.

Actual Cash Value vs. Replacement Cost

Actual cash value coverage, as the name implies, will reimburse you for the cost of the property (less depreciation) at the time of the claim, minus your deductible. This may result in a lower claim payment than you expect. Replacement cost coverage, on the other hand, will reimburse the full value of the property. While the up-front cost is greater, you are more likely to receiveaccurate compensation for your possessions.

Use Your Tax Refund to Improve Your Credit Scores

Tax return checkIt’s income tax season and many Americans have already planned what they will do with their refund check as soon as they get it. Making large purchases or taking a vacation are popular ways to spend tax money. Many consumers also use their tax refunds to pay down credit cards or other debt.  Whether you are looking to buy your dream car or improve your financial wellness, DMCC has a great service to give your goals a boost.

DMCC’s Credit Score Analysis service will provide you a custom plan of action on how to improve your credit scores for only $49.

If you plan to make a large purchase with financing, your credit score will be a deciding factor for approval, as well as getting a desirable interest rate.  Your purchase options may also be limited if your credit score does not meet the lender’s requirements. Even with approval, a low credit score may result in a higher interest rate costing you thousands of dollars. Ultimately, your credit score will either cost you thousands of dollars or save you thousands of dollars in interest over the long run.

If you plan to pay down your credit card balances or other debts and do not have sufficient funds to pay all your debts in full, then you should allocate payments in amounts that will maximize your credit scores. For example, reducing the balance-to-credit ratio on three of your credit cards to below 30% should increase your credit scores by more than just paying one of your credit cards in full.

DMCC’s Credit Score Analysis service will identify the specific steps you can take to increase your credit scores, helping you get affordable financing for that planned purchase, either now or in the future. Our certified credit counselors will provide you a written report that tells you exactly what you can do, including how much cash you need to pay down each of your outstanding debts to maximize the positive effect on your credit scores.  After you take each step, it will typically take 30-60 days for the credit reporting agencies to update your credit reports and scores. Once the changes have taken effect, you can start planning your purchases with confidence in knowing your credit worthiness has improved.

If you think your credit scores could be better and anticipate receiving a tax refund this year, consider taking advantage of this valuable DMCC service.