Playing it safe can cut
By Gretchen Wieman
In today's economy, many of us are looking to save money in every way we can. One often-overlooked path to savings is closely examining our homeowners' insurance.
You know having good coverage is important – it would be foolish to allow such a large investment to be unprotected. But is it possible to actually lower your home insurance rate without sacrificing security or compromising the quality of coverage? Yes, say our experts. Here are some tips to help you start saving now.
Check with several different insurance companies to get rate quotes. Find out which one is willing to give you the best option. Don't switch providers too often though – some insurance companies reward customers who stick around with a special discount for company loyalty.
Many companies offer discounts of 5 to 15 percent if you purchase both homeowners and auto insurance from them. It's still advisable to compare the savings of combining policies to signing up for good deals with more than one company.
Raise your deductible
The higher your deductible (the amount of money you are responsible for before the insurance company starts paying on a claim) the more you save on your premiums. The only catch is that if something goes wrong you need to make sure that you can meet the higher deductible. Alarmingly, the current trend in homeowners insurance is to raise premiums if customers file one or two small claims, or even to cancel the policy – this will likely cost more money in the long run than paying for smaller claims yourself.
Review your policy annually
If you make improvements to your house that increase its value you may want to increase the amount of coverage you have to keep your investment safe. Conversely, if you've recently made other changes, such as selling items like art or jewelry, you no longer need coverage for them, and can save a little extra money by revising your policy.
"An insurance plan has to be flexible enough to change direction as needs evolve," says Lyndsay Briley of Country Financial. "Finding an agent who is willing to lay out all of your choices to help you achieve 'your' idea of a great home insurance policy and overall insurance plan is key." It is also important to be aware of what exactly is covered. Reviewing policies will keep you informed and keep your policies up to date. "Many people are surprised when a maintenance issue is not covered in a claims situation," says Briley. "Wear and tear of an aging property and/or routine maintenance are not generally covered by a home insurance policy."
Safeguarding your home
Paul Houston, president of Conrad-Houston Insurance, says that upgrading your security system is a good way to save. "Look into an upgraded central security system or fire alarm," he advises. "Many insurance companies will offer credit when you make your home safer."
Some providers even offer savings for simple changes, like installing deadbolts and smoke detectors.
Some companies may offer discounts as much as 15 or 20 percent if you install a sprinkler system over your kitchen stove or a fire and burglar alarm that connects to a central monitoring station. (But these systems aren't cheap, and not all of them will qualify for a discount. Before you buy, find out what your insurer recommends, and how much the device would cost as opposed to how much you'd save on premiums.)
Other upgrades include retrofitting your home to withstand earthquakes (earthquake insurance usually costs extra), adding storm shutters, shatterproof glass and reinforcing your roof. If you've modernized your plumbing, heating or electrical system since the last time you updated your policy, tell your insurance company, and they may offer a price break.
When considering home improvements, ask your insurance company representative what you can do to make your home more resistant to natural disasters such as windstorms and earthquakes.
Surprising ways to save
You may also qualify for a discount if you:
• are at least 55 years old and/or retired (you're more likely to be home and nip potential problems in the bud)
• don't smoke (you're less likely to accidentally start a fire)
• own a fire extinguisher (you can put out fires before they get out of control)
• maintain good credit (you're less of a risk to the insurance company itself) •live close to a fire hydrant or in a community that has a professional (not volunteer) fire department.
While many companies offer these and other discounts, they don't all offer the same types of discounts or the same level of discount.
And be sure to read all of the fine print – owning swimming pools, trampolines, or dog breeds like Pit Bulls or Rottweilers can limit your policy or, in some cases, cause it to be void. Don't hesitate to ask your insurance company if they offer certain discounts or if there are certain aspects of your lifestyle that make you more of a risk.
When it comes to insurance, one of the best things you can do is be practical. Cathy Adams, an account executive in Conrad-Houston's Personal Lines division, says that, in Alaska, house fires are one of the most common ways for homes to be damaged. "In the winter, people get cold and want to crank the heat up," she says. "Woodstoves get too hot, or people forget to pay attention to space heaters, and then a fire starts. Taking preventative measures is the best way to save money when it comes to insurance."