It'll take some time, but could save
you a good sum of money. Ask your friends, check the Yellow Pages or
contact your state
insurance department. (Phone
numbers and Web sites are listed here.)
National Association of Insurance Commissioners (www.naic.org)
has information to help you choose an insurer in your state,
including complaints. States often make information available on
typical rates charged by major insurers and many states provide the
frequency of consumer complaints by company.
Also check consumer guides, insurance
agents, companies and online insurance quote services. This will
give you an idea of price ranges and tell you which companies have
the lowest prices. But don't consider price alone. The insurer you
select should offer a fair price and deliver the quality service you
would expect if you needed assistance in filing a claim. So in
assessing service quality, use the complaint information cited above
and talk to a number of insurers to get a feeling for the type of
service they give. Ask them what they would do to lower your costs.
Check the financial stability of the
companies you are considering with rating companies such as A.M.
and Standard & Poor’s (www.standardandpoors.com)
and consult consumer magazines. When you've narrowed the field to
three insurers, get price quotes.
Deductibles are the amount of money you
have to pay toward a loss before your insurance company starts to
pay a claim, according to the terms of your policy. The higher your
deductible, the more money you can save on your premiums. Nowadays,
most insurance companies recommend a deductible of at least $500. If
you can afford to raise your deductible to $1,000, you may save as
much as 25 percent. Remember, if you live in a disaster-prone area,
your insurance policy may have a separate deductible for certain
kinds of damage. If you live near the coast in the East, you may
have a separate windstorm deductible; if you live in a state
vulnerable to hail storms, you may have a separate deductible for
hail; and if you live in an earthquake-prone area, your earthquake
policy has a deductible.
confuse what you paid for your house with rebuilding costs
The land under your house isn't at risk
from theft, windstorm, fire and the other perils covered in your
homeowners policy. So don't include its value in deciding how much
homeowners insurance to buy. If you do, you will pay a higher
premium than you should.
your home and auto policies from the same insurer
Some companies that sell homeowners,
auto and liability coverage will take 5 to 15 percent off your
premium if you buy two or more policies from them. But make certain
this combined price is lower than buying the different coverages
from different companies.
your home more disaster resistant
Find out from your insurance agent or
company representative what steps you can take to make your home
more resistant to windstorms and other natural disasters. You may be
able to save on your premiums by adding storm shutters, reinforcing
your roof or buying stronger roofing materials. Older homes can be
retrofitted to make them better able to withstand earthquakes. In
addition, consider modernizing your heating, plumbing and electrical
systems to reduce the risk of fire and water damage.
your home security
You can usually get discounts of at
least 5 percent for a smoke detector, burglar alarm or dead-bolt
locks. Some companies offer to cut your premium by as much as 15 or
20 percent if you install a sophisticated sprinkler system and a
fire and burglar alarm that rings at the police, fire or other
monitoring stations. These systems aren't cheap and not every system
qualifies for a discount. Before you buy such a system, find out
what kind your insurer recommends, how much the device would cost
and how much you'd save on premiums.
out other discounts
Companies offer several types of
discounts, but they don't all offer the same discount or the same
amount of discount in all states. For example, since retired people
stay at home more than working people they are less likely to be
burglarized and may spot fires sooner, too. Retired people also have
more time for maintaining their homes. If you're at least 55 years
old and retired, you may qualify for a discount of up to 10 percent
at some companies. Some employers and professional associations
administer group insurance programs that may offer a better deal
than you can get elsewhere.
Maintain a good credit record
Establishing a solid credit history can
cut your insurance costs. Insurers are increasingly using credit
information to price homeowners 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 on which the insurer relied. To protect your credit
standing, pay your bills on time, don't obtain more credit than you
need and keep your credit balances as low as possible. Check your
credit record on a regular basis and have any errors corrected
promptly so that your record remains accurate.
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. 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 make certain to periodically compare this price with that
of other policies.
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. If your five-year-old fur coat is
no longer worth the $5,000 you paid for it, you'll want to reduce or
cancel your floater (extra insurance for items whose full value is
not covered by standard homeowners policies such as expensive
jewelry, high-end computers and valuable art work) and pocket the
for private insurance if you are in a government plan
If you live in a high-risk area -- say,
one that is especially vulnerable to coastal storms, fires, or crime
-- and have been buying your homeowners insurance through a
government plan, you should check with an insurance agent or company
representative or contact your state department of insurance for the
names of companies that might be interested in your business. You
may find that there are steps you can take that would allow you to
buy insurance at a lower price in the private market.
you’re buying a home, consider the cost of homeowners insurance
You may pay less for insurance if you
buy a house close to a fire hydrant or in a community that has a
professional rather than a volunteer fire department. It may also be
cheaper if your home’s electrical, heating and plumbing systems
are less than 10 years old. If you live in the East, consider a
brick home because it's more wind resistant. If you live in an
earthquake-prone area, look for a wooden frame house because it is
more likely to withstand this type of disaster. Choosing wisely
could cut your premiums by 5 to 15 percent.
Check the CLUE (Comprehensive Loss
Underwriting Exchange) report of the home you are thinking of
buying. These reports contain the insurance claim history of the
property and can help you judge some of the problems the house may
Remember that flood insurance and
earthquake damage are not covered by a standard homeowners policy.
If you buy a house in a flood-prone area, you'll have to pay for a
flood insurance policy that costs an average of $400 a year. The
Federal Emergency Management Agency provides useful information on
flood insurance on its Web site at FloodSmart.gov.
A separate earthquake policy is available from most insurance
companies. The cost of the coverage will depend on the likelihood of
earthquakes in your area. In California the California Earthquake
provides this coverage.
If you have questions about insurance
for any of your possessions, be sure to ask your agent or company
representative when you're shopping around for a policy. For
example, if you run a business out of your home, be sure to discuss
coverage for that business. Most homeowners policies cover business
equipment in the home, but only up to $2,500 and they offer no
business liability insurance. Although you want to lower your
homeowners insurance cost, you also want to make certain you have
all the coverage you need.