Deductible and Comprehensive Insurance Costs
Insurance rates are confusing to many, but knowing the tricks of the trade could put you on your way to savings. For instance, if you raise your deductible (the amount of money you would pay toward a loss before your insurance company pays out a claim), you can save more money on your premiums.
Many insurance companies recommend at least $500 on your deductible. Though, if you raise yours to $1,000, you could potentially save up to 25 percent on premiums. Keep in mind that certain disaster-prone areas come with separate deductibles for specific damages, such as wind storms or earthquakes. But there are ways to get significant discounts, like getting impact-resistant roofing or storm shutters.
Also, think about comprehensive coverage and what you will get from your insurance program. Comprehensive coverage normally covers damage from vandalism, fire, and falling objects like hail. There are, of course, special exclusions with any insurance policy. So make sure you check what is covered before buying your homeowners insurance policy.
Prone Areas
Certain prone areas come with an added cost to home insurance. For example, if you live in a high-crime area or a high-risk flood zone, your insurance company will raise premiums. Premiums vary from ZIP code to ZIP code, which takes into account many different variables. It’s important to know what area you live in and how that could affect your premiums.
Natural Disasters
In many prone areas, the more resistant your home is to natural disasters, the more savings you will have on your insurance policy. For example, you could make your home more resistant to hail and wind storms. You could add storm shutters or reinforce roofing with stronger roofing materials, specifically if your area is prone to hurricanes. Retrofitting your older home may be a great way to withstand earthquakes. Additionally, reduce the risk of fire and water damage by modernizing your electrical, heating, and plumbing. Talk to your local insurance agent about changes that could impact your savings.
Replacement Costs
Your policy should cover any major replacement costs of your home, your purchases, and any additions to your home. Remember that the land your home is on isn’t at risk for any perils covered in your home insurance policy. You do not have to factor in your land value when deciding how much insurance you need to buy. Doing so will result in higher premiums.
It’s also unnecessary to spend money on coverage you don’t actually need. You may have a floater (extra insurance for items not fully covered on your homeowners policy). It’s recommended by the Insurance Information Institute that you cancel or reduce your floater amount if your items are no longer worth the price you originally paid for them.
Credit Score
It’s illegal in most states to refuse coverage because of a low credit score. Though, as a guideline, it’s best to keep your credit cards paid off and only utilize up to 30 percent of your available credit. If you have a high credit score, you could end up with an insurance discount, which would significantly help with annual savings.
Claims History
If you have a homeowners insurance policy, your previous claims could lead to higher insurance rates and rate hikes in the future. So, as a guideline, it’s crucial to ask yourself if the claim is worth an annual rate increase or if it could be easily solved without an insurance payout.
Multi-Policy
Multi-policy discounts are pretty straightforward; you bundle your insurance policies with the same carrier. Did you know that there are multi-policy discounts available for home insurance when you add another insurance like auto insurance? Look for insurance carriers that offer bundling, as many do.
Additional Insurance Discounts
Policyholders could be eligible for additional insurance discounts for a variety of reasons. First, most property insurance carriers offer discounts for having home security and smoke detectors. Home security systems and fire alarms lessen the opportunity for theft and fires. These things save the insurance company (and you) money by not having to file an insurance claim. Some insurance companies also offer non-smoker discounts to reduce the risk of fires. Being married can also save you a buck or two.
Additionally, many insurance companies are offering temporary discounts for those impacted by COVID-19. Check with the insurance carrier to see what kinds of temporary discounts or payment options are available if the pandemic has impacted you and your family. Ask your local insurance agent about special homeowners insurance rates for these special instances.
