How to Protect Your Home (and Not Break Your Budget) Series

Our 4-week series is a must for every homeowner. Once you buy a home, it’s now all your responsibility! But are you truly prepared for the unexpected? This series is a great overview on what you need to know when it comes to getting homeowner’s insurance, keeping your home safe and secure, and avoiding costly mistakes when protecting your home.

When it comes time to renew your homeowner’s insurance to pays to take a little time and review the policy, what is covered, and what you have changed or upgraded in your home over the past year.

A new roof, remediating a basement that gets water, and major renovations can all impact your policy costs, and your coverage needs.

Before renewing your policy check to see if there are areas you can save money, or if you qualify for certain credits, these savings can come back to you or be used to increase coverage in other areas. Discuss changes and upgrades you have made with your insurance agent to get the details you need to make cost effective decisions.

Here are some quick tips every homeowner should know about:

 Shop around. Rates vary from company to company for the same coverage on the same home. But don’t just focus on rates, check consumer guides and your states insurance department. You can get valuable information on different insurance companies as well as information on complaints.  You want an insurance company that offers quality service in addition to reasonable prices. You may also want to check on their financial stability with rating companies such as Standard & Poor’s or A.M. Best. Then pick three companies to get quotes from, always include your current company.

Buy home and auto policies from the same insurer. “Bundling” your insurance policies home, auto, etc. with one company can provide additional savings of 5-15%.

Raise your deductible. Deductibles are the amount you are responsible for before the insurance company starts to pay. Provided you can afford to raise your deductible from $500 to $1000 or more you could save as much as 25% on your annual premium. If you raise your deductible remember you will have to pay the first $1000 (or your deductible amount) before the insurance company pays. Don’t file claims that are less than or marginally over your deductible you’ll still pay most, or all the cost and you could impact your rates.

Improve your home’s security and safety. Install a smoke detector, burglar alarm or dead-bolt locks and you may save at least 5 percent. Some companies may cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and an actively monitored fire and burglar alarm system.

Talk to your insurance agent before investing in these systems and they can be expensive and not all will qualify for a discount. Check with your insurance agent to see what products might qualify for discounts such as programable thermostats, water and gas sensors. Some water sensors can even turn off the water. Again, balance the cost of the item against the savings.

Maintain a good credit record. Insurers are increasingly using credit information to price homeowner (and car) 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.

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, especially if you have not filed a claim. 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 … just because they offer a loyalty discount doesn’t mean that there may not be a more cost-effective alternative, so check to see if there is a better alternative before renewing your policy.

Review the limits in your policy and the value of your possessions at least once a year. You want your policy to cover any major purchases or additions to your home. But you don’t want to spend money for coverage you don’t need anymore. Some items depreciate over time so review your policy annually, so you don’t have too much coverage.

Don’t forget to review the riders on any special items such as jewelry, artwork, electronics, or other high-dollar items.

Look into group membership discounts. Are you an AAA member, in the military or belong to an alumni organization? You may be eligible for membership discounts with your insurance company. It’s worth asking about any discounts when renewing. It can be a benefit of being a member in a professional group, a trade organization, or a non-profit association.

Upgrade older features in your home. If you have an older home update your plumbing, electrical and heating and/or air conditioning systems to prevent fire or unwanted leaks. You’ll be less risky and can reduce your rates. Also talk to your agent to find out if there are other upgrades you should consider.

Don’t insure the land. It’s important to insure your home for replacement value (not market value) but make sure to deduct the cost/value of the land itself. Fires, floods, and windstorms can damage the house but not the land itself so make sure you are not overpaying for insurance.

Quit smoking. Insurance costs more for smokers because of an increased risk of fire-related claims. If you smoke, and are serious about lowering your bill, consider quitting. If you were a smoker when you took out the policy but have recently quit let your insurer know.

Make payments electronically. Many companies now charge for mailed payments, so have your payments automatically deducted to shave that cost.

Reconsider a pool or hot tub. These may or may not impact your premium depending on where you live so talk to your agent before you get one. If you already have one, discuss the measures necessary to decrease any risk.

Double check dog breed/obedience training. Certain breeds will either cause your insurance company to cancel coverage or increase your insurance rate. So you might want to find out which breeds affect insurance rates before you get a dog. If your dog attends obedience training, let your agent know and it can mitigate any increases.

Here’s another must-do tip:  This one may not save you money on your policy, but it could help you substantiate a claim! When you start to review your current policy, it’s also a good time to take photos and take stock of the items in your home. That way you’ll be prepared and have proof if you ever need to make a claim. This is especially important if you have some unique or expensive items.

Finally, we are always here to help, but this article should not be taken as insurance advice in any way.  Please talk to your licensed insurance provider to make sure you have the right coverage for your situation.

Think of using this article more as a guide to help your conversation with them so they can help you make the right choices.