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Although you may dread doling out large sums of cash for your homeowners policy year after year, you can’t afford to go without it. That would be crazy. However, you don’t have to break the bank to carry suitable coverage.
It’s nearly 2015, so it’s time for a year-end review of how much you’re paying for homeowners insurance. Money Talks News founder Stacy Johnson offers some tips that can help you slash your homeowners insurance rates by 20 percent or possibly more. Watch the video below and continue reading for additional cost-cutting strategies.
1. Increase your deductible
The more liability you assume, the lower the rate you’ll pay. You can save 10 percent to 30 percent on your premium by raising your deductible from $250 to $1,000.
Afraid that you may not be able to afford the higher amount you’ll pay out-of-pocket in the event of an emergency? Beef up your emergency fund to cover the increase. That way, the money will be there when you need it, and you’ll save a substantial amount of money each year on your policy.
2. Check for multiline discounts
It pays to bundle up. According to the Insurance Information Institute, some companies will reduce the price of your policy by 5 percent to 15 percent if you purchase two or more policies with them.
3. Don’t overinsure (but don’t underinsure either)
This is often confusing to people: You want sufficient insurance to cover the cost of replacing your home from scratch, but since your lot can’t burn down, there’s no point in insuring its market value. Verify the amount your insurance company says is the replacement cost of your home by multiplying the cost per square foot for residential building in your area by the number of square feet you have.
But be careful. It’s not unusual for homeowners to underinsure, and this isn’t a place to cut corners.
Also make sure your insurance will cover the cost to replace the contents of your home with new items.
4. Shop around
For this year-end review, carve out a chunk of time to shop around for more affordable insurance. This can quickly be done on the Money Talks News Insurance page.
If you find a better deal elsewhere, ask your current insurer whether you can get a better rate. You may find you qualify for discounts you’re not aware of.
If you are considering switching companies, research the financial health of the new company. There’s no point in paying thousands in premiums and being unable to recoup any losses if you must file a claim. An analysis can be done through independent rating agencies, such as A.M. Best and Standard & Poor’s, and your state insurance department.