To keep your bottom line in check, understand policy pricing variables. The price you pay for your homeowner's insurance can vary by hundreds of dollars, depending on the size of your house and your insurance company. From shopping around to making home improvements, here are some areas to review before purchasing coverage.
- Do not skimp, but do shop around.
- Ask friends and relatives for recommendations for companies and do your own due diligence.
- Check the financial strength of the company you are consider. Use independent rating agencies to determine financial status --A.M. Best.
- You can call insurance companies direct or utilize independent insurance agencies (like Consultative Insurance Group) to secure multiple quotes from a variety of insurance companies.
- Get at least three quotes. Be sure the same information is being used so you can have an "apples to apples' comparison.
- Do not shop price alone.
- While you are shopping, consider the quickness and courtesy shown to you by the representative, it is a forerunner of potential issues later.
Raise Your Deductible
Deductibles are the amount of money you will be responsible for paying toward an insured loss or claim incident. The higher the deductible, the more money you can save on your premium. Consider the premium reduction by taking a higher deductible.
Buy Your Home and Auto Policies From The Same Insurer
Many companies (insurer/carriers) that sell auto insurance also sell homeowner and personal umbrella coverage. Many insurance companies give discounts for "bundling" the coverages (auto and home; auto, home and umbrella) under the same carrier.
Make Your Home More Disaster Resistant
If you live in a disaster-prone area, you will have more coverage options if you take certain preparedness steps before a disaster occurs. Consider installing storm shutters, shatterproof glass, reinforcing or having your current roof replaced. Consider modernizing your HVAC and electrical systems to reduce risks from fire and water damage. Taking this action can reduce the damage to your home and have less stress at the time of a claim.
Do Not Confuse What You Paid For the House With Rebuilding Costs
Your homeowner's policy is based on the cost to rebuild your home. Not its real estate value. While your house may be at risk from theft, windstorm, fire and other perils, the land it sits on is not, so do not include its value in deciding how much homeowner's insurance to buy. Request the carrier or agent to do a "MSB" (Marshall & Swift/Boeckh system) report on your home.
Ask About Discounts For Home Security Devices
Most insurance companies provide discounts for security devices such as smoke detectors, burglar and fire alarm systems or dead bolt locks. As some of these measures are not cheap and not every system qualifies for a discount, consult your insurance professional for recommendations.
The types and levels of discounts vary from company to company and state to state. Examples of additional discounts are over 55 years of age, retired, updated, and modernized plumbing and electrical systems.
Stay With The Same Insurer
Some carriers offer a discount for being a long-term customer. It is still a good idea to look around every 3-5 years.
Review The Value Of Your Possessions and Your Policy Limits Annually
Review your home inventory (everything in your home) and up-grades to your home or condo. Make sure the current policy limit covers the replacement costs of any new items you have added, or improvements made to the residence.
If possible, consider taking into consideration before you buy the home, these factors
- Location - Fire protection class code for where the property is located.
- Types of construction - All masonry homes are usually less expensive to insure than ones which are frame.
- Neighborhood - Is it a high crime area?
Things To Do Before You Go House Hunting
Check Your Credit Rating. A good credit rating makes it easier to secure a mortgage. You may be able to qualify for a good credit discount on your insurance as well. If credit rating is low, take steps to improve before you start looking for homes.
- Protect Yourself with a Renters Policy. If you are currently renting a home or apartment, protect yourself with a renter's policy. It will provide coverage for your personal belongings while you are trying to secure a home and provide a useful insurance history to your prospective homeowner's insurance company when you go to buy your first home.
- While House Hunting: Remember that the physical characteristics of the house: its size, location, construction, and overall condition. These can affect the cost, choice, and availability of home insurance. In some cases, desirable features like ornate plasterwork or proximity to the coastline can make insuring a house costlier or more difficult.
Other Factors To Keep In Mind While Shopping
- Quality and Location of the Fire Department: Houses that are located near highly rated, permanently staffed fire departments usually cost less to insure. This also holds true for homes that have a hydrant nearby.
- Houses located on or near the coast will generally cost more to insure than those further inland. You may be required to purchase flood insurance and have a higher deductible on your property insurance for windstorm damage. You may also have to purchase the "wind" coverage through a state pool.
- Age of the Home: A stately older home can be quite beautiful but ornate features like plaster walls, ceiling molding and wooded floors may be costly to replace and can raise the cost of insurance. Plumbing and electrical systems can become unsafe with age and the lack of maintenance. If you are considering buying an older home, find out how much it will cost to update these features and factor that into the cost of ownership.
- Condition of the Roof: A new roof matters to insurance companies and keeps you and your family safer. Make sure to check the roof's condition. Depending on the type of roof and whether or not it is made with fire and/or hail resistant materials, you may qualify for an insurance discount.
- Quality of Construction: Find out if the home has been updated to comply with current building codes. Homes well built by careful craftsmen and those constructed to meet modern engineering-based building codes are likely to better withstand natural disasters.
- Risk of Flooding: Damage from flooding is NOT covered by a standard home insurance policy. If you are busying a home in a flood zone area, you will have to purchase a separate flood policy.
- Earthquakes: Believe it or not, we have earthquakes. Earthquake coverage is normally excluded, but can be bought back through by adding an endorsement to your home policy. A separate charge is made for adding back this coverage.
- Swimming Pools or Other Special Feature: If your home has a swimming pool, hot tub, or other special feature, you may want to consider higher liability limits on your home insurance policy and an umbrella.
Before You Place A Bid on the Home, Consider These Items
Check the loss history report. Obtain a Comprehensive Loss Underwriting Exchange report (CLUE-Lexis Nexis, A-Plus). These reports could disclose underlying issues that can be corrected before you purchase. It will list all the past losses that have occurred on the property.
Get the home inspected. You will need to have the home inspected by a credentialed home inspector to get your mortgage approved. Be prepared to accompany the inspector to make sure they are thorough and make sure to:
- Check the general condition of the home.
- Look for water damage, termites and other types of infestation.
- Review the electrical system, plumbing, septic tank, and hot water heater.
- Show you where potential problems might develop.
- Suggest important upgrades or replacements.
- Get estimated cost of annual maintenance costs -- all homes regardless of age or construction will have maintenance costs.
- Get the facts, adjust your budget.
Remember the price you pay for your homeowner insurance can vary, and by planning ahead of time before you purchase your home, can save you money. Visiting an independent insurance agency gives you more options, as they offer more insurance companies within one agency and can provide multiple quotes for you with the different carriers.
As an independent agency, Consultative Insurance Group is your one-stop-shop for insurance and welcomes an opportunity to quote your insurance -- from your home insurance, car insurance, umbrella insurance, to your business insurance, key-employee insurance and group benefits. We even offer Pet Insurance!