Are you paying more than you have to for home insurance? You're not alone. There have been significant increases in homeowners' premiums in the...
Are you paying more than you have to for home insurance? You're not alone. There have been significant increases in homeowners' premiums in the...
View Advice and Tips RSS feedAre you paying more than you have to for home insurance? You're not alone. There have been significant increases in homeowners' premiums in the last few years. The good news is that you don't have to keep paying the same rate.
Your deductible is the amount of money you have to pay before your insurance kicks in. For example, say you have a deductible of $1,000 on your home insurance policy. If you have a kitchen fire and are forced to make a claim with your insurance company, the first $1,000 of damage will come out of your own pocket.
Most insurance companies recommend that you have a deductible of at least $500. If you go any lower, your rate will go up. Of course, this works both ways. If you increase your deductible, this will also save you money. Raising your deductible from $500 to $1,000 could save you as much as 25 percent.
If you are worried about not having enough money to pay the higher deductible should an accident occur, you could always take the money you save and put it into an account. Since the average homeowner pays $835 per year in home insurance (source: Insurance Information Institute), a 25 percent savings would be equal to nearly $209 per year. In less than two and a half years, you could have the money needed to cover the additional $500 you added to the deductible.
Think about it; that money will look a lot better in your bank account than it will in the pockets of your insurance company!
The amount you pay in homeowner insurance premiums is often directly related to the amount of risk the insurance company associates with your home. For example, if you live in an area that is prone to floods or earthquakes, you will most likely be required to pay a higher rate than someone whose home is not at risk.
Of course, there is no easy way to change where your home is located, but there is no reason why you can't make your home more resistant to the threats you are insured against. Most insurance companies offer discounts to their policyholders who have added reinforced roofs, storm shutters, and new heating and plumbing systems.
Some companies offer discounts as high as 5 percent simply because you have a carbon monoxide detector or smoke alarm. There are also higher discounts-up to 15 or 20 percent-for policyholders who have sprinkler systems or security alarms.
Chances are, there are discounts that you are eligible for right now or could easily qualify for in the near future. With a quick call to your insurance company, you should be able to find out for sure.
Do you know just how much insurance you need, or did you take the recommendation offered to you by your insurer? Most people just take the recommendation at face value, and for this reason, they pay much higher premiums than they have to.
This is why it is a good idea to review your policy every year. You should make sure that any new purchases or recent additions to your home are covered, but you should also look out for coverage you don't need. For example, your jewelry collection might be missing a few pieces, and perhaps is no longer worth the $5,000 you insured it for a few years ago.
You should also check to make sure you didn't confuse what you paid for your house with the cost of rebuilding it. Remember, you bought land too. Generally, it is only your house that is at risk from fire, theft, storm damage, etc. If you are paying to insure the property as well, you can probably change that and save a bundle on your insurance premiums.
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