There are so many additional expenses to owning a home which we never think about until we have one, and homeowners’ insurance is just another one of those payments. The average American pays nearly $1,000 annually on homeowners’ insurance, and home owners in more disaster-prone states such as Florida and Texas can see their costs spike up to $2,000 while states like Idaho and Utah average around $500.
But you do not have to head to the Rockies in order to slash your homeowners’ insurance. A few small steps and due diligence can trim your rates.
Check your coverage
Once you get used to making insurance payments, you may just start sending your check automatically without thinking about what you are paying for. But while under-insuring your home can be catastrophic if disaster hits, over-insuring your home is an easy way to waste money.
Take the time to go over your policy and see if you are being covered for something you do not have to worry about. For example, cancel earthquake coverage if you live in Boston. One key point which homeowners should check for is to see if your insurance policy covers the loss of any electronics or jewelry which you no longer own or if its value has decreased. If it does, then cancel those policies and pocket the reduced cost.
Bolster your home’s security
A secure home means lesser burglaries aid fires, which means that your home is less of an insurance risk. Most insurance companies will offer a discount if you take measures to protect your home such as smoke detectors, deadbolts, a burglar alarm, or even a sprinkler system. One of the basic security measures you can take to bring down your insurance is to make sure you have good locks on all your doors.
However, a lot of these measures are expensive and can end up costing you more money than you might save with a discounted insurance policy. Before taking the time and money to add new features, talk with your insurance company about what you can do to improve your home and what discounts they will offer.
Combine your different insurances
Improving your home security is not the only way to get a discount. Many homeowner insurance companies also offer automobile or life insurance. These companies will often offer a small discount if you choose to purchase multiple policies from just them. For example, Allstate proclaims that “you can save up to 25% off your auto premiums and up to 35% off your home premiums” if you purchase both insurances from them, and most major insurance providers advertise similar discounts.
Just like bolstering your home’s security, you should check with the insurance companies to see exactly how much you can save in your situation and whether it is actually cheaper than sticking with your original plan. But this discount compared with the aforementioned security discount could save you quite a bit.
Raise your deductible
The deductible is how much you are liable for in the event of damages. If you suffer damages that are less than your deductible, then you will have to pay for it out of your own pocket.
Insurance companies obviously do not like to pay for your damages and will offer you a lower rate if you choose to raise your deductibles. This can be a challenging decision and requires you to decide whether the increased risk of a higher deductible is worth the lower rates.
But you do not have to raise your deductible to something catastrophic. Raising the deductible to $1,000 compared to the normal accepted sum of $500 will provide enough of a discount that it will be normally worthwhile. If you have the money saved up for the occasional emergency and take steps to keep your home safe, then it can be worthwhile to go for the higher deductible.
Be careful about small claims
If an insurance company thinks you are more of a risk, they will charge you more. And one of the key ways in which they determine who is a risk is by the amount of claims you file. Even small claims such as a broken window can make insurers more wary about you and end up increasing your premiums.
Remember that insurance exists to cover catastrophic losses. If you have a smaller loss which you can afford to pay back without too much difficulty, it may be for the best for you to bite the bullet and eat the cost without filing a claim. While you may not like your insurance company, you do want to keep them on your good side so that your rates stay low. Filing a bunch of small claims that do not even exceed your deductible will not keep them happy.
Featured photo credit: State Farm via flickr.com