Many of the variables that affect the cost of your homeowner’s insurance are under your control. You may get the coverage you require and even save hundreds of dollars annually by making a few wise choices. Think about the following 10 Top Best Tips For Home Insurance Buyers.
When hunting for their dream home, buyers of homes, particularly first-time buyers, frequently neglect to budget for home insurance, but they should. Your house insurance prices can be greatly affected by where you reside.
First-time buyers frequently choose the house insurance provider that their real estate agent suggests, but this isn’t always the best option for getting the best pricing or necessarily the best coverage. To choose wisely regarding your homeowner’s insurance policy, consider the following tips:
10 Top Best Tips For Home Insurance Buyers
You must understand the different types of home insurance cover. Home insurance is divided into two types of cover: buildings and contents.
Buildings insurance covers against damage to the structure of your house as well as its fixtures and fittings. This damage can be caused by a number of things, including fire, flooding and vandalism.
Contents insurance protects your belongings, such as clothing, electronic devices or furniture, against theft, fire and flooding, amongst other things.
If you aren’t sure of the difference between the types of home insurance cover, imagine your house was turned upside down. Anything that doesn’t move falls under buildings cover and the rest would be contents. You can buy either buildings or contents insurance individually or combine both. Combined home insurance cover usually costs less.
Consider the following tips, which can go a long way toward protecting your home and your peace of mind:
1. Buy Coverage That Absorbs a Spike in Home Repair Costs
The dwelling coverage within a home insurance policy pays to repair or rebuild your home if it’s damaged by a problem covered by the policy, like a house fire. Your dwelling coverage amount should be based on what it would cost to rebuild your home based on the local construction and labor costs. But certain situations, like a tornado that flattens entire neighborhoods, can cause a spike in rebuilding costs. Suddenly your dwelling coverage amount could be insufficient.
Fortunately, some insurers offer home insurance with extended or guaranteed replacement cost. These optional coverage types absorb a spike in construction costs by adding extra coverage to your dwelling insurance limits when needed.
Companies that offer extended or guaranteed replacement cost coverage include AIG, Auto-Owners, Chubb, Cincinnati, Erie, Farmers, Hanover, Lemonade, Nationwide and QBE.
2. Keep Home Insurance Afloat
If you want home insurance for all types of water damage, you’re going to need to plug some major holes. Here are a few things to consider:
Don’t Underestimate Your Flood Risk
It’s estimated that only 15% of homeowners have flood insurance. But many homes are at risk for flooding, possibly even your home. Floods are the most common natural disasters in the U.S. and 99% of counties were impacted by floods between 1996 and 2019, according to the Federal Emergency Management Agency (FEMA).
Going without flood insurance can be very costly and potentially devastating. Most folks get flood insurance through the National Flood Insurance Program (NFIP), but you can also get a policy through the private market.
And if you already have a policy through the NFIP, you may be pleasantly surprised. FEMA’s flood insurance rates have recently undergone a new pricing system, and some homeowners can take advantage of reduced rates.
Small Drops Make Up an Ocean
Floods aren’t the only water problem to threaten your home and savings. Home insurance covers certain water damage and leaks, but not all types of water damage. Here are some tips to help you stay dry:
- Get smart. A water-leak detector can alert you via smartphone if there is a leak or a freezing pipe is about to burst. A water-leak detector can not only help reduce claims and shelling out for an insurance deductible, but you might also qualify for a home insurance discount.
- Fortify your home. If you live in a storm-prone area, you can take steps to make your home strong enough for a hurricane and reduce roof leaks and damage from wind-driven rain.
- Shore up your coverage. You can buy more coverage types to safeguard your home against water damage. For example, you can typically add coverage for sump pump failure and sewer backup.
3. Don’t Assume You’re Covered for Natural Disasters
Floods are not the only disaster commonly excluded from a standard home insurance policy. If you live in a disaster-prone area, you might need to bolster your home insurance with endorsements or additional policies to ensure you’re fully covered.
For example, you may need to augment your hurricane insurance plan with a separate windstorm policy in some coastal areas. Or if you live in an area with seismic activity, you may want an earthquake insurance policy.
Before you buy another policy or add an endorsement to your home insurance, it’s a good idea to speak with your insurance agent in order to understand the options. Insurance for natural disasters can have complex limits (such as different limits for categories of property), exclusions and high deductibles.
4. Take a home inventory
The personal property coverage in a home insurance policy pays to repair or replace belongings—your clothes, jewelry, furniture, pots and pans, musical instruments, electronics, books, art, and even the decorations and knick-knacks you keep on your shelves.
But how much personal property coverage do you need? One good way to find out is by creating a home inventory. A good home inventory can both speed up an insurance claim and help maximize your claim payment. If you forget what you owned, you won’t make a claim for it. It’s one of the smartest and easiest things you can do to prepare for unexpected home insurance claims.
5. Bump Up Your Liability Coverage
With so much focus on your house and belongings, it’s easy to overlook liability coverage within a home insurance policy.
Liability insurance pays for a legal defense, judgments and settlements if someone sues you over injuries or property damage and you’re legally responsible. For example, if someone takes a bad fall at your house, a lawsuit would fall under your homeowners liability coverage.
A good rule of thumb is to buy enough liability coverage to cover your assets, or what you could be taken from you in a lawsuit. Another option to ensure you have adequate liability coverage is to purchase an umbrella insurance policy.
6. Be Aware of Geography
Regardless of the homebuilding materials used, where you live can have a significant effect on your insurance premiums and coverage availability. Homeowners likely will pay more for insurance in areas prone to severe weather and natural disasters, such as tornadoes, hurricanes, earthquakes or wildfires.
According to the Insurance Information Institute, the states paying the most for homeowners insurance in recent years have been Texas, Louisiana and Florida, all coastal states with above-average claims for water and wind damage.
Your rates also may be affected by the neighborhood you choose. For example, homes in close proximity to a fire department may cost less to insure. And while seclusion can have its advantages, it won’t lower your insurance rates if emergency vehicles may have difficulty reaching your home.
7. Consider Your Comfort Level
As you establish your homeowners insurance coverage, you’re able to choose your deductible level, which is the amount you will pay out of your pocket when you have a claim. Opting for a higher deductible, such as $1,000 instead of $500, can lower your monthly premiums significantly.
Conversely, you may be more comfortable paying a higher premium each month for greater peace of mind should disaster strike. The choice is yours to make. Your insurance company can provide a variety of premium/deductible scenarios that will best suit your needs.
8. Embrace Preventive Maintenance
Remember that a homeowners insurance policy is designed to repair or replace your property in the event of an unexpected major loss, and individuals who repeatedly file claims for minor problems may face higher premiums and could jeopardize their insurability.
Conducting preventive maintenance on your home and repairing small problems quickly can help avert more substantial losses down the road. A number of providers offer home warranty coverages more suitable for maintenance needs involving appliances, plumbing or the like.
9. Keep Your Records Current
If the unthinkable should occur and you have to file a major insurance claim, having up-to-date records of your home’s contents and structural condition can be invaluable during the claims process. First, if you’ve made any significant renovations to the home itself after moving in, be sure to inform your insurance company, since it may affect the replacement cost of the home.
Next, take an inventory of your belongings, including how much you paid for each item and its current value. Make a record of your possessions, with pictures or a video camera, and store the records outside of your home so they are less likely to be destroyed in a disaster. The record can help you determine your coverage needs, and it also can serve as your proof of ownership if a loss occurs, helping the insurance company to estimate your payment.
10. Pick a Good Insurance Company
Doing business with an insurance company you trust is important. Before purchasing insurance, review the company’s complaints record and rankings on customer satisfaction and financial security. Your state’s department of insurance Web site, and industry analyst companies such as J.D. Power or A.M. Best Company, are unbiased sources of information.
6 Tips for Getting the Best Rate on Home Insurance
Although homeownership requires paying for homeowners insurance, this does not mean you should overspend on it. Fortunately, there are a number of methods to reduce the cost of your homeowners insurance premium without sacrificing your protection against burglary and natural disasters.
Here’s how to lower house insurance, whether you’re looking to purchase a new policy or want to lessen the cost of your current one.
1. Shop around for the best value
Shopping around is one of the best ways to reduce your homeowners insurance premium. Call at least three reputable homeowners insurance companies and compare policy coverages line for line, keeping in mind that the least expensive policy doesn’t always offer the best value.
Most property insurance policies exclude coverage for earthquakes and floods, so if these natural disasters are likely in your area, make sure to bargain accordingly. The insurance business is notoriously competitive, so once you’re armed with the details of each policy, don’t hesitate to try and negotiate with your preferred provider for the lowest rate possible.
2. Protect with a monitored home security system
Installing a monitored home security system is a money-saving tip many homeowners aren’t aware of. In fact, a number of insurance companies may reward you with a discount of 15% or more if your home is protected by a monitored home security system.
Homes with security systems are less likely to be burglarized than those without one, and that means there is less chance you’ll file a claim. If you’re considering protecting your home with a security system, don’t hesitate to ask your insurance carrier how much you could save by doing so.
3. Raise your deductible
Generally, the lower your insurance policy deductible (the amount you pay before your insurance takes over) the higher your insurance premium. Raising your policy deductible is a tried and true way of saving money on all types of insurance, including homeowners insurance. For example, raising your deductible from $500 to $1,000 could lower your premium by as much as 25%.
4. Make sure you don’t have too much coverage
There’s a good chance your insurance agent warned you about the risks of being under-insured, but he may not have mentioned you can also be over-insured. Under-insured means you don’t have enough insurance to adequately protect your belongings; over-insured means you’re paying for more coverage than you need.
One of the best ways to prevent being over-insured and wasting your hard-earned money is to review your policy annually when it is up for renewal. Check the policy line for line, keeping an eye out for floaters, which is additional insurance for items that aren’t covered in your standard policy, such as jewelry and artwork. If you no longer have the items, or their value has decreased substantially, you might be able to lower your coverage and save money.
5. Consolidate your insurance policies
If you’re looking to save money on your homeowners’ insurance premium, consolidating various insurance policies could be the answer. Ask your insurance provider what other insurance products they sell, and how much you might save by buying more than one product, such as homeowners and auto. Not only is there a good chance you’ll get a reduced rate on both policies, you’ll also enjoy the convenience of paying just one bill.
6. Analyze your credit report
Now you have one more reason to review your credit report for accuracy on an annual basis. Believing that a poor credit history correlates to increased insurance risk, it’s common for insurance companies to look at your credit report before quoting you a rate. The good news is, a superior credit history could reward you with lower than average premiums.
As you can see, there are many easy ways to reduce your homeowners’ insurance premium without sacrificing coverage, and as we mentioned a home security system is one of the best. If you’d like to learn more about the many benefits of a home security system, check out our top picks for the best home security systems in the country.
Hints About Homeowners Insurance
- Read and understand your policy.
- Maintain a list of personal property, as well as photographic records, and store in a safe-deposit box or other location away from home.
- Make sure that your coverage keeps pace with improvements or rising value.
- Review your policy annually.
- Contact your local fire department or other emergency agencies for area-specific information on improving the safety of your property.
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