Homeowners insurance
Your home is one of your biggest investments. You are taking a plunge into the unknown, when you buy your first house. And in most of the cases, it would be on a mortgage. No lender would be ready to give you money over your home unless you first have homeowners insurance.
The homeowners insurance becomes important in this stage. Not only this insurance gives you coverage against any damage on your home and assets, it also covers the people for whom you are legally responsible. Thus having homeowners insurance gives a lot of peace of mind. This policy is usually a package policy involving coverage for the damage to your property as well as liability for any damage you or any of your family members cause to anyone else.
A standard or basic homeowners policy covers damages to the structure of the house, personal belongings, liability protection, and living expenses if you are not able to live in the house for any reason. There are damages which are not covered by a homeowners policy like damage caused by floods, earthquake, war, nuclear explosion or lack of maintenance.
Tips on saving money when purchasing homeowners insurance:
Depending on the insurer the cost of the insurance varies. That means you can get the same coverage at different costs from different companies. If the decision is taken wisely, it would mean a saving of hundreds of dollars as premium for your homeowners insurance coverage. There are some points which should be considered before you purchase your homeowners insurance.
1. Research: It will be helpful, if you can get quotes on homeowners insurance policies from different companies. You can log on to the websites of the companies and get information regarding the policy. Also you can talk to friends, go through the yellow pages, check consumer guides etc. Also you can contact the state insurance department for guidance. States usually have a page where you can get the rates of major insurance companies as well as the frequent complaints lodged against companies by other people which can give you an idea about what you are going for and what all things you should consider before you decide on a particular policy from a particular company. After the research is done and a few companies are in consideration, you can get the quotes of these companies and make your choice.
2. Increasing the deductible amount: A deductible is the amount which the homeowner has to pay on any particular damage. Every insurer has a deductible, usually $500.But if you can afford, increase the deductible as much as you can so that the premium comes down. The increased deductible has a direct impact on the premium. The higher the deductible, the lesser the premium. Also there might be deductibles for some kinds of damages, like if you are living in a windstorm prone area; the policy would have a windstorm deductible.
3. Land cost different from the cost of the home: Homeowners insurance is meant for the structure of the house and what is in the house, including all expensive items like electronics, jewellery etc. the land beneath the house would not be affected by a natural calamity or fire or theft. So when you are calculating the amount of homeowners insurance, dont include the price you have paid for the land. If you do, it would only increase the premium that you have to pay.
4. Buy your home and auto insurance from the same insurer: Some companies offer discounts if you buy your homeowners insurance as well car insurance from them. Before deciding on this, however, you should compare the rates of different companies offering this discount. Also you should ensure that the combined premium at the discounted rate is lower than the premium for separate homeowners and car insurance from different companies.
5. Make your home more secure and damage proof: Insurers offer advice on what measures you can take to make your home more resistant against fire or wind as well how to make your home safer. These measures would then result in the lowering of the premium amount that you have to pay. For example you can install smoke detectors, sprinklers in case of fire, burglar alarms that ring at the police, storm shutters, reinforcing the roof against wind, reinforcements in plumbing and electrical systems to reduce the incidence of fire. All the above mentioned measures are expensive to get installed, so it would be better, the agent from the insurance company is contacted to find out which of the systems, the company advice, so that there would be a reduction in the premium.
6. Seek out the discounts: Some companies offer discounts to elderly people, some offer some discounts in certain states. Get as much information as you can before applying for the policy. There are also associations which give group insurance program which would be considerably less expensive.
7. Good credit record: These days, most insurers check your credit records as well as other mode of bill payments to see your spending nature and how regular you are in paying your bills. If you have an up to date credit record and if you are a conservative spender, you may be able to cut you insurance premium considerably.
8. Keep the same insurance company: Many companies offer some discounts if you keep your policy with them for a number of years. But at the same time, you should ensure that you are still getting a good deal from the company, compared to the rates that other companies offer.
9. Review the limits of your policy as well as the values of your possessions: At least once a year you should see if there had been any major additions or deletions to the personal belongings, and see if you are paying additional amount of money for what you think is not worth at present. Also ensure that any major additions are included in the policy. It would be helpful if photographs are taken and a video recording is done of your home as well as personal belongings and these are kept in a safe place where it would not be destroyed by any calamity.
10. Consider homeowners insurance when looking to purchase a house: See for the electrical and plumbing systems, the structure of the house when you are searching for a house to purchase. If these systems are too old according to the insurers standards, you might end up paying more premiums. Also the location of the house may result in the reduction of the premium. For example, if your house is located in the vicinity of the fire brigade, you might end up paying fewer premiums.
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