Cut Home Insurance Costs, Not Coverage

By Arthur Murray

For most products, saving money means lowering your expectations. For example, you can significantly reduce the price of a laptop by dialing back on the processor you want, making do with less RAM or living without a top-of-the-line dedicated graphics card.

But home insurance isn’t like most products. You needn’t sacrifice the quality of your coverage to save money on your premium.

Follow these five tips and you can shave big dollars off your bill without weakening the protection for what’s likely your largest investment.

Shop your coverage

Don’t let your current provider take you for granted. Shop your coverage at least once a year to see if you can find a better deal. You might be surprised at the difference in the quotes.

Be sure that coverage and limits are the same across the board in all the policies you compare. Pay particular attention to each policy’s dwelling coverage limit. It should be enough to rebuild your house from the ground up if it is destroyed by a covered peril. That’s not the same as the price you paid for the house, or the amount you could get by selling it.

One easy way to determine your dwelling coverage is by multiplying the square footage of your home by local building costs. Don’t know those costs? A home insurance calculator can help you estimate the amount of coverage you need.

In addition, make sure the insurance companies you consider are reputable. Each should be rated at least ‘Excellent’ or better for financial stability by A.M. Best Company. Check with family members, friends or neighbors to find someone who has experience with whatever company you choose. Paying lower premiums is no bargain if the customer service falls short.

Bundle your policies

Most home insurance carriers sell car insurance, and most auto insurance providers sell home coverage. In many cases, you’ll get a price break — sometimes up to 20 percent — if you purchase both coverages from the same company. You also can get a discount if you purchase boat or RV coverage from your home insurance provider.

Look for discounts

Another way to lower your payments is to take advantage of discounts offered by home insurance providers. These discounts vary by state and provider, so make sure you work that into your comparison when shopping for insurance online.

Use a discount comparison tool or ask your agent whether you should be getting the benefit of the following discounts:

    • New home. If your home was built within the past 10 years, you could save up to 20 percent on your premiums.Claims free. Haven’t filed a claim in 10 years? You could receive a price break of up to 20 percent.
  • Security systems. If you’ve installed a monitored home security system, you could receive a discount of up to 10 percent.
  • 55 or older, and retired. You could save up to 20 percent on home insurance premiums for your primary residence.
  • Smoke detectors. Most houses have them these days, and they can win you a discount of up to 5 percent.
  • Deadbolt locks. Again, you probably already have these. Make sure your insurance carrier knows it, and you could get 5 percent off your premiums.

Raise your deductible

Your deductible is the amount you agree to pay toward a home insurance claim. In general, the higher you set your deductible, the lower your premiums will be.

It’s important to keep that deductible at an amount you can afford if you have to file a claim – you won’t get financial help from your insurer until you meet your deductible.

Depending on what your deductible is now and how much you increase it, you could save up to 15 percent annually by taking this step. This won’t affect your coverage – just your monthly bill.

Improve your credit score

Home insurance providers base your premiums on the risk they believe you present. Certain aspects of your credit score help predict your likelihood of filing a claim. The better your credit score, the lower your home insurance premiums.

This is a longer-term play, but it is one of the most lucrative because it has benefits that transcend home insurance. Improving your credit score means you could also get better rates for your mortgage, car loan and credit cards.

How? Watch your debt, and pay it down as quickly as you can. Use a variety of credit, and don’t miss payments. Generally, just be a smart consumer and live within your means.

Following these suggestions can help you substantially reduce how much you’re paying for home insurance – without touching your coverage. You don’t want to save money at the expense of putting your home and family at greater risk. Luckily, you don’t have to.

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