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Question 2 of 3 in Pricing Policies |
What are some of the ways I can cut the cost on my home insurance? |
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Different companies charge different rates for similar coverage. First take stock of what coverage you have and what options your insurer offers. No one wants to spend money for coverage they don’t need. You can knock off the cost with some of the following:
a. Increased deductible - approximately 1/3 of all covered damage or losses are $100 or less. If you increase your deductible (to $250, $500, or $1,000), you significantly reduce the risk of loss to the insurance company and can shave a significant percentage off the cost of the policy. This keeps good coverage for major claims while you pick up the tab for the smaller ones.
b. Multiple policy discounts - many insurance companies offer discounts if you buy two or more policies with them (e.g., your home and auto).
c. Burglar-proof security devices - installation of dead bolt locks, smoke detectors, fire/burglar alarm systems, sprinkler systems, motion-sensing outdoor lights, and fire extinguishers can each reduce the premium by about 5%. If you put in a sophisticated home-security system that rings into the local police or fire department or to a private security firm, look for a larger discount (15% to 20%).
d. Fire-resistant building materials – a few insurers offer discounts if fire-resistant building materials are used. Other insurers make fire resistant materials a pre-requisite before they will make an offer to insure a dwelling (i.e., some insurers require fire-resistant roofing materials such as tile and will not insure a dwelling if the roof is made from cedar shakes).
e. Long-time policyholders - longevity with an insurer counts and the longer you have been with the same company, the greater the reduction.
f. Senior citizen - some companies offer senior citizen discounts because they generally spend more time at home.
g. Group insurance - some employers, unions and other organizations have made arrangements for discounted insurance for their employees and members.
h. Annual premium payment - paying for your insurance once each year may be less expensive than a semi-annual, quarterly or monthly periodic premium payment schedule.
i. Comparison shop - check out offers from a few insurance companies - don't simply settle for the first insurance offer that comes your way.
j. Insure the home, not the land – a common misconception is that you need home insurance at least equal to the amount you paid for your home. However, that may not be the case since it is not necessary to insure the land your home sits on.
k. New home – you may be in line for a reduction if your home is new. Your discount probably declines after the first year, but the reduction is still attractive up front.
l. Non-smoking households – some insurers reduce premiums if all the residents of your home are nonsmokers.
m. Loss-free policies – a few insurers offer discounts if you have been with them for some time and have not incurred losses.
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