So, you've resolved to reduce expenses this year. Fortunately, this
resolution may be easier to keep than you think. Take another look at your
homeowners insurance. In many
states, companies offer policy discounts, credits and reductions. To trim
costs, combine insurers' inducements with smart strategies.
Inquire about Discounts. Ask if you qualify for any of these types of
premium reductions:
New Home: If your home is less than six years old, you may be entitled to
a discount. Some insurers will slash 8% to 15% off the premium.
When shopping for a home, keep in mind that companies consider various
factors when evaluating a home's eligibility for a reduced rate. These may
include the home's proximity to
emergency services such as a fire hydrant or fire station, type of
construction, location and age.
Companion policy: Insuring your home with the same company that
insures your life or car may entitle you to a discount. Some companies
reward customers by cutting the premium
5% to 15%.
Protective device: Depending on the type, a fire or burglar alarm or
sprinkler system installed in your home may generate a premium
discount. Before purchasing an expensive
system, check with your insurer; not all systems qualify for the discount.
Then weigh the cost of an approved system against the expected savings
on the premium.
Mature homeowner credit: Retirees age 55 or older may be eligible for this
credit. Companies realize that retirees tend to stay close to home. As a
result, homes are better
maintained, and a potential loss, due to fire or burglary, could possibly be
averted by a quick response. Some companies reward seniors with as
much as 10% off.
Secured community credit: Residing in a fully secured (entry protected on
a 24-hour basis) or partially secured (card activated entry) community may
be all you need to take
advantage of this premium credit.
Home improvements: Making improvements to your home, such as
upgrading plumbing, replacing roofing, decreases the possibility of a loss
and just might give you a greater return
than you imagined, a reduced premium.
Lifestyle: With 23,000 smoking-related fires a year, companies tend to
reward nonsmokers with a 2%-5% discount.
Loyalty discount: In recognition of their customers' loyalty, some
companies reduce premiums by 5% after three to five years and by 10%
after six years or more.
Resist over-insuring. In the end, it only inflates the premium. The Better
Business Bureau suggests that you determine how much your home and
possessions are worth. Start by
itemizing your possessions then have an agent help you estimate the cost
to rebuild your home. Also, don't make the mistake of insuring the land.
Although your home could succumb
to fire and other calamities, the dirt will remain.
Increase your deductible. Low deductibles cost plenty. By raising the
deductible from $250 to $500, you may rack up 12% in savings; increase
it to $1,000, and you could pocket
up to 24%. And a $5,000 deductible may reduce your premium by up to
37%. Keep in mind that savings vary, depending on the insurer.
A word of caution: Before opting for a higher deductible, check with your
mortgage lender. You may be required to carry a low deductible.
Consider an inflation guard endorsement. Your coverage will be
automatically adjusted to inflation each year. If you elect this coverage,
check with your agent that the amount
of increase accurately reflects the cost of replacing your home. If it does
not, increase or decrease the coverage as needed.
Compare companies. Take advantage of the competitive environment
insurance companies operate in. Discounts vary from company to
company and from state to state. Obtain
three written estimates on comparable policies and services.
Look into group plans. Alumni associations and professional
organizations often procure group discounts for members. See if one of
your memberships offers a discounted rate
in homeowners insurance.
Contact David with any questions you have about the home-buying process. He'll be glad to help you out. Prudential Joy Tarbell Realty is
an independently owned and operated member of The Prudential Real
Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.
