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How To Save Money On Your Homeowners Insurance

The cost of your homeowners premium can vary from company to company. Here are some things to consider when choosing a homeowners policy.

Shop Around

Prices may vary significantly from company to company. Find an independent agent who represents a wide range of companies. When you reach out to them, just ask which companies they represent. You should request quotations from at least 3 of them.

Before you decide on which company, confirm the Companies Financial rating through AM Best or Standards and Poor's. You want to make sure they are strong financially.

One last thing, the most important thing an insurance company can do for you is the timely and accurate payment of claims. Make sure you either ask an agent or check with the state insurance commissioner for information relating to the companie's claims paying ability and process.

Raise Your Deductible

All homeowners insurance policies have a deductible limit. Think of it as the amount of money you will pay “out of pocket" before your insurance policy will kick in. By increasing your deductible, you are telling the insurance company you are willing to increase your self-insurance. Insurance companies view this as a good thing, as a result the higher the deductible, the lower the homeowners insurance premium. In some instances by raising your deductible to $1,000 you may be able to save up to 20%. Before jumping in and changing your deductible, make sure you can financially absorb the additional risk.

Speaking of deductibles, if you live near the coast make sure you understand the “wind storm" deductibles most companies are including on their policies. It usually is a percentage (2-5%) of your total dwelling coverage. This means that if damage is caused by a windstorm (or in some cases a “named storm", i.e. Sandy) this higher deductible applies before the homeowners policy will kick in. Chances are this deductible may be raised but never lowered.

Understanding Replacement Cost

Insurance companies use the replacement cost of your home as a factor in determining your premium. Replacement cost is the amount it would cost to repair or replace the damaged property using materials of like kind and quality without a deduction for depreciation. Coming up with the replacement cost may be difficult, especially for older or customized homes.

Some insurance companies may use their own methodology when determining the replacement cost. When getting a homeowners quote ask to see the replacement costs. This will allow you to compare not only the amount of premium but also the dwelling coverage limit in which you are receiving.

Make sure you are comfortable with the replacement cost, because in the event of a total loss, it may be the maximum dwelling amount payable under the policy. Remember, the replacement cost may be very different from the Market or Re-sale Value of your home.

Combine your Automobile and Homeowners Policies from the Same Insurance Company

Most insurance companies offer discounts if you allow them to write both your home and auto insurance. Any independent agent is well aware of this and should be able to accommodate your request. Make sure you ask them to review several different scenarios, as your current home and auto companies may not offer the best combined rate. By placing both policies with the same insurance company you may be able to save 15-20%

Maintain a Good Credit Rating

More and more insurance companies are using credit scores as a pre-qualifier for homeowners insurance. By maintaining a good credit score you will be able to obtain insurance quotes from more companies, which generally will offer you the best selection.

Communicate with Your Insurance Agent Any Changes You May Have Made to Your Home.

If you make any significant changes to your home (new addition, new garage, customized kitchen/bath etc) it is a good idea to notify your agent. You want to make sure that your coverage stays current with your Home.

You don't want to have to pay any more in premium than is necessary. So take a few minute each year to review not only your dwelling coverage limits but also review your contents and scheduled coverage's. For instance, if you bought or sold jewelry and you had it scheduled on your policy, the change may impact your premium.

Other Stuff You Can Do to Save Money

Some insurance companies will provide you with suggestions on making your home more disaster resistant to windstorms. By adding hurricane proof windows, storm shutters, or replacing your roof with stronger materials you may also be able to save on your premium. Replacing older heating, plumbing or electrical systems, can also prove to be worthwhile.

Installing smoke detectors, fire or burglar alarms or even dead bolt locks may result in some savings. If your installing an alarm system that rings at a monitoring station or directly to the Police or Fire Departments it will maximize your savings.

Stay with the same insurance company for several years. Many insurance companies offer their customers an additional discount if you renew your policy with them. The discounts offered vary and may increase over the life of your policy.

Flood and Earthquake Coverage

Remember Flood and earthquake coverage is not part of the standard homeowners policy and would need to be purchased separately. If you are purchasing a new home in an area which may be prone to floods you should definitely buy flood insurance. You should also consider earthquake insurance if you deem it appropriate.
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