Quick Fixes
There are lots of things you can add or take away to lower your insurance premiums that involve little or no construction work, so yes all you tool-challenged people out there, this is for you! There are some “improvements” that you should consider standard in your house, insurance or not, include smoke and carbon monoxide detectors, fire extinguishers and deadbolts on all doors. These can not only save you money on your insurance, but could actually save your life! Another of these improvements you should implement to protect yourself along with your wallet is to have your fireplace, flues, and chimney cleaned regularly, which prevents many home fires. A burglar alarm is another great option; find the coverage that is right for you, whether that involves monitoring from a central station, a direct line to the local police station, or floodlights and video cameras.
A bit less obvious is the type of pet you have, for example fish often do much less damage than pit bulls can. Also, many insurance companies offer discounts to non-smokers because of the more than 23,000 residential accidental fires per year started from lit cigarettes.
Construction Gurus
These options are a bit more challenging construction-wise, and are most useful when buying or building a house. The most basic thing to look at is where is the house located. If it is in an area with high crime rates or natural disasters, your premiums will automatically be higher. Also, if you are not near a fire station, or a fire hydrant, you will also be charged more. On the same topic, some companies will lower your premiums if you have a professional instead of volunteer fire department.
Next, look at what your house is made of. For example, typically, wood-framed structures (because they are highly flammable) will cost more to insure. Conversely, cement or steel-framed structures will cost less because it is less likely to succumb to fire or adverse weather conditions.
Now we can start moving into the specifics, like the age of your electrical, heating and plumbing systems. Newer systems (less than 10 years old) will most likely reduce the risk of fire and water damage, and will thus lower your premiums. Looking in your backyard can alsohelp to lower your premiums. Trampolines, pools and any other toys can drive costs up by 10% or more! Try adding netting to a trampoline, or a lockable fence around a swimming pool. Also try ditching the diving board, where most injuries occur. Finally adding storm shutters or reinforcing the roof or earthquake retrofitting can help in high-risk areas.
Land Theft?
People often assume that they need to insure your house for the amount they bought it for, but that is fortunately not the case. If the house burned to the ground, you would still have the land it was built on. For this reason your house and everything in it needs to be insured, but the land doesn’t.
Deductible
Like any other insurance, the higher the deductible, the lower the premiums. Also, keeping your premiums higher ensures that you don’t call on your insurance when you don’t really need it, which is important because calling in home insurance for a $500 problem could add up to 85% in surcharges for years after, so you are really paying more to insurance than you would to fix it. For this reason, try to match your deductible to the surcharges. Also, check with your mortgage broker first because some brokers only allow a certain limit.
All-in-One
Most insurance companies offer discounts of 10% or more if you consolidate your different insurances under their roof. So when you look for an insurance agency, look at all the insurance policies they offer. This could end up saving not only on your homeowner’s insurance, but on all the others as well!
Burn Baby Burn
Obviously this is easier said than done, but homeowners that pay off their mortgage debts will most likely see their premiums drop. Why? The simple reason is that the insurance company figures that if you own the home outright, you’ll take better care of it.
It’s all Who You Know
Some companies offer discounts for being affiliated with certain organizations, ranging from credit unions, colleges or even credit cards. Also ask about group coverage, some businesses or alumni can work out insurance deals that give discounts for members. Talk to the association heads for more information about whether they offer this.
Loyalty
Choose you insurance company very carefully because if you an stick with them over the years, many companies offer loyalty programs usually involving discounts, which can be from 5-10%!
The All-Powerful Credit Score
Insurance companies are increasingly using credit information to price insurance policies. Don’t have too many open credit accounts, don’t charge close to the limits on your credit cards, and pay all your bills on time to keep your credit score healthy.
Tips on Coverage
So your TV finally died and you only get $50 for it? Well that seems ridiculous, there is no way you could buy another one for $50! Unfortunately it is what you signed up for. Actual-Value Coverage will reimburse you for the price you could have sold the item for today, but it doesn’t account for what it would take to replace it today, which is why Replacement-Cost Coverage is a much better idea. Replacement-Cost Coverage will basically pay for you to get a comparable one, but this coverage will probably cost more. Also just a note to remember, flood and earthquake insurance is not included in most standard packages, so make sure you check into extended policies if you need that.
My last great tip to saving money in your coverage is: make sure you don’t’ buy what you don’t need! For example, don’t get earthquake coverage in a non-earthquake zone, or a jewelry floater to your policy if you don’t own expensive jewelry. Read the fine print and make sure you are paying only for what you need.
