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.
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.
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.
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