Your Answers to These Six Questions Could Save You Money on Homeowners Insurance

It's been quite a while since Billeater covered the subject of homeonwer's insurance. Back in November 2008, we told you how to get the most out of your home's insurance. But with the ever-increasing costs of homeowners insurance, we though you might want to know how to get it at a better price too. Just taking a look at your policy from the insurance company's perspective can help you understand the steps you can take to save money on your premiums.

Are You a Good Risk?

Take a step back and look at your home for the insurance company's point of view. Are you a good risk? Much of the answer to this question lies in your location and the resulting steps you should take to protect your home from damage. For instance, those who live in dry climates need to keep bushes and shrubs a few feet from the house to prevent a brushfire from spreading to the house. Those living on the coast should consider stronger, wind-resistant building materials and storm shutters. Talk to your agent about changes you can make. They might suggest updating the heating system around your house, or even replacing some out-of-date wiring. Those in earthquake country may be able to retrofit their foundations. One common suggestion is to keep fire extinguishers, smoke detectors and fire alarms up-to-date to prevent fire damage. Theft premiums can be reduced by security devices, deadbolts are other common theft deterrents.

Are You a Good Customer?

Your insurance company likes customers that buy multiple policies. They show their appreciation by offering a reduced premium when you combine your auto insurance and homeowners insurance. Some companies offer discounts of 5 to 20% for homeowners insurance. It might help you to find a broker who can find the company with the best homeowners and auto policies in a combination package. The agent may even be able to get you a better rate. A good customer also saves by paying the premium in full, rather than paying installment fees.

Are You a Good Shopper?

Actually, your insurance company hopes you are not a good shopper, unless of course, they are offering the best rates. Then they love you. As with any purchase, you can reduce your homeowner’s insurance costs by shopping around. This usually means getting separate quotes from three different insurance companies. Even your bank might offer insurance discounts with premium checking accounts. Checking with your individual state insurance department for comparison rates may also find you discounts. Typically, you are probably already getting a “longevity discount” if you've been with the same insurance agency for many years.

Will You Shoulder Some of the Risk?

You could also consider raising the insurance deductible for your home. A few insurance companies out there offer 1% deductibles. These are calculated based on the insured value of your house. This means that you would have a $3,000 deductible on a $300,000 home. The bottom line seems to be, that if you are willing to assume a portion of the risk, then your insurance company may find a way to level the playing field.

Do You Know Your Stuff?

Take the time to educate yourself on coverage and discounts. Knowing what your homeowners insurance policy will cover is an important tool. If you're planning on rebuilding, or adding space to your house, then make sure your policy covers this. Include in any significant purchases that you've made for home improvements. Be logical in your insurance purchases. Do you really need flood insurance if you don't live near the water or earthquake insurance if you're nowhere near a fault line? The answer to this questions may not be as simple as it appears. Some people learn the hard way that they live in 100-year flood zones and are stuck with the 1 out of 100 years that it floods – without flood insurance.

Check with your insurance agent about the risks associated with your location and make an informed decision. Be careful to give an accurate assessment of the replacement cost of your home. Do this by multiplying the square footage by the median cost per square foot of residential construction. Depending on the quality of materials, home construction costs between $80 and $200 per square foot. Check online for the going rate and calculate your rebuilding costs based on that figure. Do not include the value of the land your home sits on when calculating this.

How Old Are You?

And don't forget to ask about senior citizen discounts. Most insurance companies will offer discounts of up to 10% for people that are 55 years or older. Through research, insurance companies have concluded that retired couples are more apt to stay at home, spot incidents like home damage or fires sooner than the younger generation (who are often at work), and simply maintain their homes more carefully.