Homeowner’s insurance is a necessity when you own a home, but it is unfortunately one of your priciest bills. Traditionally bundled in escrow with your land taxes, this monthly payment can cost just as much as your mortgage! Obviously, you need the coverage – god forbid you should experience a house fire or a natural disaster, your insurance would be the only thing standing between yourself and homelessness. With that said, there are ways to intelligently cut corners on your insurance bill. These sensible solutions don’t place you at risk, but still shave a few dollars off the astronomical cost of coverage. Show me the homeowner who isn’t interested in cutting costs!
You wouldn’t buy the first car you saw on a lot, right? Like so many expenses in life, it makes sense to shop around when choosing a homeowner’s insurance company. As you may already know from finding your auto policy, premiums can vary by hundreds of dollars a year simply based on what insurance carrier you go with! For the best results, go through an insurance office where an exprienced agent can do the legwork for you. Make sure that you are comparing apples with apples when comparing policies, however. A cheaper policy is not a deal if it comes with higher deductibles and less coverage than one more expensive.
You can get breaks on your insurance for all sorts of things. One category is features that make your home safer, such as dead-bolt locks, an alarm system, or security cameras. Other discounts can come from home features that safeguard against damage, such as storm shutters, hurricane windows or attic clips, or fire-retardant roofing material. Long-term customers and those over age 55 may also be offered discounts, but you need to speak up and ask.
Many homeowner’s policies will charge you based on the total value of your property, which includes your home and the land underneath it. But that is an unnecessary add-on to your coverage. After all, your land will still be there even if your home is damaged. If you don’t subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should. This is another savings that comes from talking to the right people and combing all the details of your policy to make sure you aren’t paying for more than you need, while still covering everything that you do require.
As is the case with so many other things in life, an ounce of prevention is worth a pound of cure – or, more relevantly, a couple hundred dollars in proactive coverage is worth thousands in potential damages that leave you on the hook. Discuss with your insurance agent exactly what types of damage are covered, including natural “acts of God.” Many homeowners are caught off-guard by this loophole. Be sure to obtain the coverage you need, or, alternately, ensure that you are financially covered in case of the worst possible scenario.
Once again, have a frank talk with your agent about what kind of coverage you are actually paying for. You want “replacement” coverage, which gives you the money to rebuild your home and replace its contents. An “Actual Cash Value” policy is cheaper, but pays only what your property is worth at the time of loss – your cost, minus depreciation for age and wear. Think about this like gap coverage for your auto loan… you definitely want a policy that sets you up to return to your normal lifestyle if you are rebuilding after a tragedy.
Usually, your home contents are covered up to a certain dollar value, and the coverage does not include unique or valuable items. These sorts of things can include fine jewelry, original art, musical instruments, autographed memorabilia, antiques, and other miscellaneous treasures. Someone who collects Rolex watches, for instance, should definitely inform their insurance agent and question the need for a rider. If you have any doubt, it’s better to ask and be safe rather than sorry.
Keep in mind that flood damage is usually not covered by a standard homeowner’s insurance policy. If you live in an area prone to flooding, take advantage of the National Flood Insurance Program. This additional coverage can be costly, so keep that in the back of your mind if you are shopping for homes near the water.