Homeowner Insurance Help
Your home is not just where you live and sleep, it is also probably your single most valuable financial asset and where you store your personal possessions. Find a reputable insurer so that your real and personal property are adequately insured. You want to have enough coverage, but you also want to save money on premiums whenever possible.
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Research the Insurer
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Before selecting an insurer and comparing quotes, check out the reputation of the insurers. Most states have a website or toll-free hotline administered by the state's insurance commissioner or regulatory office. Your insurer should be licensed or authorized to do business in your state. Have the company's exact name because many fraudulent insurers use names that closely resemble a legitimate company's name.
Maintain a Good Relationship
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Maintain a good relationship with your insurer. Many insurers offer loyal customer discounts if you have held policies with them for years. Pay your premiums on time because an insurer can cancel your policy for a missed payment.
In filling out your insurance questionnaire, know the condition of your property. For example, if you do not know what type of electrical wiring you have, ask an electrician or a knowledgeable friend or neighbor before you give the wrong information. Let's say you tell the insurer that your wiring is updated. If after a fire the fire department discovers you had an outdated, faulty electrical system, the insurer is within its rights to deny your claim.
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Get Adequate Coverage
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Your coverage should be high enough to replace your home and belongings in case of a loss. Most homeowners seek coverage for 80 to 100 percent of building replacement costs and 50 to 75 percent of the value of the contents. If you have an antique collection, costly electronic equipment and jewelry, ask if you need special coverage for those items. Insurance is meant to cover the house and its content, not the value of the land. Just as you do not want to be underinsured with inadequate coverage, you also do not want to incur higher premiums and be overinsured.
Common Exclusions
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Depending on where you live, some hazards may require special riders or additional policies. Along the East Coast, wind or hurricane damage might not be covered by standard policies. Earthquake coverage in California is extra. Other states have hail storm or tornado exclusions. Flood insurance is excluded from all homeowner policies and is required separately. If you live in an area that is prone to any particular type of natural disaster, examine the policy closely to see if you need to purchase additional coverage.
Cost-cutting Tips
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Raise your deductible to lower your premium, and you could save as much as 25 percent. Pay your entire premium in one lump sum, and most insurers will give you a small discount over paying it off monthly. Buy your homeowner insurance from the same company that has your auto and liability policies and you are likely to qualify for a multipolicy discount. Ask your insurer if there are home improvements that will lower your premium, like adding storm shutters or updating your heating or electrical systems. If you are nervous that a recent home improvement will raise your premium because of the increased home value, you might be pleasantly surprised to learn that some improvements actually reduce your premium. A new roof, for example, is considered a reduced risk and results in a lower premium. Smoke detectors, burglar alarms and other security devices can reduce your premiums. Quit smoking, too, since nonsmokers are a reduced fire risk and pay lower premiums.
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References
- Federal Citizen Information Center: Insurance -- Homeowner and Renter's
- New Jersey Dept. of Insurance & Banking: Homeowner's Insurance
- SmartMoney: How Much Do You Need?
- National Flood Insurance Program: Residential Coverage Overview
- Texas Dept. of Insurance: Homeowners Insurance
- Ways to Lower Your Homeowners Insurance Costs
Resources
- Photo Credit fire. image by Yuri Bizgaimer from Fotolia.com
