|
One part of your monthly mortgage payment is your homeowner's
insurance. This is a policy that covers your home and pays to repair it in the
event of a fire, robbery or water damage. Homeowners policies can vary by
hundreds of dollars, so here are some tips to help lower the costs and keep your
monthly house payment down.
-
To start you shop around to different companies in your area
for their rates on your particular home. The 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.
But don't consider price alone. The insurer you select should offer a fair
price, deliver quality service if you need to file a claim and should also
be financially stable. 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.
- When 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.
Choosing wisely could cut your premiums by 5 to 15 percent.
You should
also check the 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 have. CLUE reports are protected by the Fair Credit
Reporting Act and can only be accessed by the owner or lender for the
property. However, you can request that the current owner of the property
order a CLUE report.
-
You can also raise your deductible. 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.
-
Don't insure the land your home is built on. 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.
-
Try to buy your home and auto policies from the same
insurer. You may save from 5 to 15 percent off your premium if you buy two
or more policies from the same company. But make sure this combined price is
lower than buying different coverages from different companies.
-
Find out from your insurance agent what steps you can take
to make your home more disaster resistant. You may be able to save on your
premiums by adding insulation, reinforcing your roof or buying stronger
roofing materials. If you purchase an older home you can also consider
modernizing your heating, plumbing and electrical systems to reduce the risk
of fire and water damage.
-
If you improve 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.
Not every system qualifies for a discount! Before you buy find out what kind
your insurer recommends, how much the device would cost and how much you'd
save on premiums.
-
Find out if you qualify for other discounts. 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.
-
If you keep your coverage with the same 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.
-
Just like when you obtain a mortgage your good credit can
help you reduce 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.
-
Make sure your policy covers any major purchases or
additions to your home. But don't spend money for coverage you don't need.
If you sell expensive jewelry or your fur coat is no longer worth the
$10,000 you paid for it, you'll want to reduce or cancel your fadditional
insurance protection and pocket the difference.
|
