Homeowners Insurance – Costs and Benefits
InsuranceCreation.com – This section deals with the costs and/vs. the benefits of your homeowners insurance policy. Be careful. There may be areas of your homeowners insurance policy where you will want to increase the premium to get some additional protection. Please see our other homeowners resources to learn more about property insurance.
- Get an insurance quote from more than one agent (we recommend at least three quotes).
- Your insurance deductible is the amount you pay before the insurance company pays. The higher your deductible, the lower your price. Ask your agent to quote all of your options.
- Consider buying multiple lines of coverage from the same insurance company. Most companies will take off 5-15% off the policy premium for each policy. Have more than one policy with the same company will also be beneficial if you have a couple of claims. It might be the difference between a company canceling you and keeping you.
- Make sure that your homeowners insurance covers the cost to replace the house. This can vary a great deal from your homes market value. A very rough method for figuring the replacement cost of a home is to multiply the number of square feet by a figure between $60 and $120. (i.e. A 1,000 square foot house might cost $60,000-$120,000 to rebuild).
- Take steps to make your own home more disaster resistant. For example, if you have a basement with a sump well, consider installing a second sump pump along with a battery back up. Not all policies cover water back up and most that do will limit the coverage amount. Even if you are covered by your insurance, a loss is never a fun thing. Do all that you can to prevent an insurance claim. Another good example is to take measures to prevent an ice dam (in snowy climates). If you are replacing a roof, be sure to consider ice shield to prevent an insurance loss.
- Ask about other discounts available (senior citizen, alarm).
- Check into a home security system. This will save you anywhere from 5% to 20% on your insurance rates. Many companies will offer a free system if you subscribe to their monitoring service. A monitored system will also provide you with the highest insurance discount.
- Check to see if you can get group coverage through your employer. Professional associations may have a different pricing structure or underwriting guidelines.
- Consistently review your insurance policy to make sure it adequately covers your home and belongings. Most policies offer an inflation rider that will ensure this.
- Consider your homeowners insurance BEFORE you purchase your home. If you decide to build your home in a flood hazard area, you could be required, by the lender, to purchase a flood insurance policy that could cost you $200-$2000 extra per year.
This is a very basic overview of some things that will affect the cost of your homeowners insurance coverage.