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The price you pay for your homeowners insurance can vary by
hundreds of dollars, depending on the insurance company you buy your policy
from. Here are ten things to consider when buying homeowners insurance.
1. Keep that credit score high
Believe it or not, your credit score can effect your insurance
costs. Insurance companies have found that credit score is an indicator of
the likelihood of a claim and are moving more and more towards using credit
data in their policy decision. It is policy in most states that insurers must
notify you if your credit score caused any adverse effects such as a higher
rate. If you receive a notice of this happening it should also allow you to
receive a free copy of your credit report. You should take the opportunity
to get your credit report and go over it to make sure the information is current
and correct. In addition to these specific instances, you are allowed to get
one complimentary credit bureaus each year. It's a good idea to space these
out one every four months or so, so that you can monitor your credit.
2. Comparison Shop
Contact your state department responsible for regulating insurance
companies. These resources often have information available regarding the
average rates charged in the state. They may also have information regarding
any complaints the company has received. The National Association of Insurance
Commissioners (NAIC) is a great place to start.
Once you have information regarding the range of prices you
can expect to pay and are aware of any troubled insurers you're ready to shop
around. You can go to insurance agents or brokers but they may try to pressure
you or earn a large commission for themselves. Online quote services are great
in that they have low overhead and charge little if any commissions. They
are able to track and compare a huge variety of policies which gives you the
best chance of getting a good value. There are consumer guides but they're
not interactive and may not have all the information you need. It's best not
simply to look at price alone, but to consider the range and quality of service
you are receiving. You need to consider what would happen in the event of
a catastrophe. Are you comfortable with the company you have chosen being
there for you?
3. Take the Higher Deductible
The deductible is the portion of the loss you are responsible
for in the event of the claim before you insurance company will pay anything.
For example if you have a 1% deductible on a $250,000 home which experienced
a total loss (we'll ignore furnishings and other losses that may be covered)
In this case you would be responsible for $2500 and the insurance company
would pick up the rest. Choosing a higher deductible can result in a lower
premiums, raising you deductible from $500 to $1000 you may save up to 25%.
In addition to the general deductible some areas of the country have special
deductibles for specific types of damage (earthquake, windstorm, hail, etc.)
4.Go private
If you live in an area where government policies are prevalent
or believed to be required, check around. There may be provisions for you
to save money by switching to a private insurer if you simply take the time
to do so. Reasons for having government insurance include being in earthquake,
fire, or flood prone areas.
5. Do you need replacement costs or not?
There are a variety of factors to consider when deciding how
much coverage to get for your property. You might want your insurance to restore
things to exactly what was lost in the event of a catastrophe. On the other
hand, you may just want to get what the property is worth to you, not the
replacement value. Often for large old homes you can't rebuild them for what
they're currently worth so you need to take that into consideration when purchasing
a policy. Also, remember that you do not need to insure the value of the land
your home sits on as it likely can't (reasonably) be destroyed.
6. Get a clue
Get a copy of the CLUE (Comprehensive Loss Underwriting Exchange)
report for the home you are getting ready to insure if you don't know it's
full history. The CLUE report will list all the prior claims against the property
and may uncover problem areas or issues you should be aware of.
7. Scoop up your multi line discount
When you're deciding who to have insure your home don't overlook
the companies you already may have for you auto, etc. Many companies have
multi line discounts for people who write two or more policies with them.
The discount can be anywhere from 5-20% depending on the insurer. To get and
apples to apples comparison you need to look at the total cost including the
discount.
8. Disaster 'proof' your home
Retrofitting you home with improved safety features or strengthened
structure materials may save you some insurance dollars as well as peace of
mind. New heating, plumbing, and electrical systems, smoke detectors or sprinkler
systems, concrete type siding materials, burglar alarms, storm shutters, and
reinforced roofing materials are just some of the projects that may pay dividends
when it comes to your premium.
9. Stay where you are
You can often receive a special discount on your premium for
being a long term customer. The time frame and discounts vary but can start
in as soon as two years and offer discounts up to 15%. Once you have narrowed
your list of potential providers down you may want to ask if they offer this
discount, it might just make the difference.
10. Review the policy once a year
The responsibility doesn't end right when you pick your policy.
It is important that you review it once a year to make sure the policy amount
still reflects your current possessions, additions, etc. Any valuables that
have serial numbers or the like should be identified and logged with the log
put in a safety deposit box or other safe location. In addition, you might
want to take a quick video of your property and keep with it. In the event
of a catastrophe the video record will help immensely when you're working
with your adjuster to establish the value that was lost.
Additional considerations
If you have questions about insurance for any of your possessions,
ask your agent or company representative when you're shopping around for a
policy or visit our online support center and speak with one of our representatives
right now.
Enter your zip code in the box below and click continue to
begin your online quote comparison now!
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