The Secret To Cutting Your Home Insurance Costs
For most people, a home is their single largest investment. Thus, it makes good sense to do everything you can to protect the integrity and value of that investment. This column is dedicated to helping you do just that – be it information on cutting edge construction materials and techniques to tips on getting the best bang for your home improvement buck. Our goal is always the same – advice on how to preserve and protect your piece of the great American dream!
Unfortunately, not all home-related matters are left entirely in your hands. You may be in the driver’s seat when it comes to making the decision to install a new roof or slap on a fresh coat of paint. But, when disaster strikes, the forces of nature take control and, sadly, you become a victim.
Fires, floods, earthquakes and tornadoes. They are just a few of the all-too-many natural disasters that can strike at any time – often when we least suspect it – that transform a home into a pile of rubble and shattered memories. The devastation that resulted from Hurricane Hugo, the Loma-Prieta Quake and the Oakland Hills fire will forever be indelibly etched into our memory.
Though no amount of money can replace priceless photographs and other treasured possessions, for most, it is comforting to know that there is insurance to help put back the pieces by repairing or rebuilding.
But having insurance simply isn’t enough. Having the right coverage with the right amounts can make all of the difference when disaster should strike. By the same token, not having the right coverage or being “over insured” can waste hard-earned dollars.
Where to begin. If you don’t have home insurance, get it! If you do have a policy, read it! Don’t feel stupid if you don’t understand much of what the policy contains. Contact your agent or an attorney to help you ferret through the legalese so you have a crystal clear understanding of what protection you have and – more importantly – where you are without protection. For additional home insurance options visit www.academywestinsurance.com/mortgage-services/.
Each year you should compare the limits of coverage in your policy to the “real world.” That is, what your possession consist of and how has your home changed. Have you make significant furnishing purchases – a new dining room set, an entertainment center, new wall or window coverings? Perhaps you have remodeled the kitchen or added on a room. The value of your home has changed and, consequently, so should the value of your insurance coverage. Conversely, you shouldn’t spend money for coverage that you don’t need.
Many people find that they are “insurance poor.” There are several ways to cut the cost of home insurance without putting your home, property and future at risk. Being a good shopper is tops the list!
One of the easiest ways to influence insurance cost is by adjusting the deductible. The deductible is the amount that comes out of your pocket before your insurance company starts to dish out the first dollar. The lower the deductible, the higher the premium. As an example, raising a deductible from $250 to $500 can save in the neighborhood of twelve percent off the annual cost of your policy.
Insurance companies look favorably upon folks that do things to enhance the safety and security of their homes. Statistically, this diminishes the insurance company’s risk and, thus, they are willing to back off on the cost of coverage. Installing a burglar alarm, dead-bolt locks, smoke detectors and fire extinguishers can render a five- percent savings. If you’re looking to cut costs even more, consider upgrading your burglar alarm to a full-blown security system that is monitored by a central reporting agency, fire or police department. You’ll get the best of both worlds – heightened security and an annual savings of about fifteen percent on your policy.
And don’t forget that an automatic fire suppression system — “sprinklers” – can chop another five to ten percent off annual insurance costs. However, not all types of systems qualify. Therefore, you should check with your agent before pulling out the old pipe wrench.
Many new homeowners believe that they should insure their home for the value of the purchase. Wrong! Insure the home – not the ground that it sits on. Thus, regardless of what the total value of the home is – land included – you should focus on what it would cost to replace the home. In most cases, the land doesn’t need to be replaced. There are, however, exceptions to every rule. Remember the row of homes in California that fell off into the ocean?
Loyalty can pay off big time when it comes to insurance. If you have been with one company for several years, you have an established track record with them. Consequently, if you that track record is good (sans lots of claims) they are willing to back off the annual policy cost about five percent. By the same token, if you buy all of your insurance through one company (auto, home, etc.), you may qualify for a discount of five to twenty percent overall. Not a bad proposition!
And let us not forget our silver-haired friends. After all one of us is a member of that crowd while the other of us no longer has a full head of hair. In any event, being a senior citizen can have its benefits when it comes to insurance coverage. If you are at least 55 years old and retired, you may qualify for a lower annual premium. Insurance companies figure that you are home more often and can, therefore, spot a fire or other disaster before it gets out of hand. Also, break-ins are less likely to occur when cars are in the driveway and/or people are at home.
Finally, aside from improving your health, being a nonsmoker has its benefits when it comes to both health and homeowner’s insurance. Insurance industry statistics report that an errant cigarette causes many house fires. Thus, if there are no smokers in your home, it is at a lesser risk of catching fire – statistically speaking. The upshot, you’ll not only save on the cost of cigarettes, your wallet will be fatter with lower insurance costs.
Might be time to quite smoke after all.
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