Many home buyers forget to shop for home insurance until the last minute and end up choosing the first company that comes along.
Well, don’t be that buyer! If you’re buying a home, make sure you start shopping for homeowners insurance as soon as your offer is accepted.
Here are some tips to help you save money on homeowners insurance:
- Keep tabs on your credit score. Just like with home loans, the better your credit score, the better pricing you’ll be able to get for homeowners insurance. By keeping track of it, you can identify any mistakes and fix them before they affect you negatively.
- Combine policies. Check with your current car insurance company to see if they offer special pricing when you combine policies. Many companies do offer combined policy discounts.
- Ask for a discount (if you’ve been with same insurance company for many years, they want to keep you). Many times companies will agree to lower your premiums if you have been their customer for a while, have never missed a payment and always pay on time. Also, many companies offer discounts for seniors.
- Insure only what you need to. Sometimes homeowners don’t realize they’re paying to insure the land where the house is located. However, this isn’t really necessary because if something were to happen, like a fire or flood, the land remains unchanged. So, in reality, you only need to insure the actual structure. It’s also a good idea to review your policy every once in a while, to make sure you’re not overpaying for items that may not be as valuable to you now as they were when you first insured them. (Remember – Flood and earthquake insurance may not be included in a standard homeowner insurance policy).
- Learn about small home improvements that make your home safer. Simple things like smoke detectors, fire extinguishers and burglar alarms can make your home much safer and cheaper to insure.
- Increase your deductible. Increasing your deductible can also save you some money, if, of course, you have an emergency fund large enough to cover it in case of a disaster.
- If it’s a new home, learn about the safety of the area. Is the home in a flood zone? Your real estate agent has to let you know whether the home you’re interested in is located in a flood zone. Also, it’s a good idea to research the crime rate and the locations of the closest police department and fire station. All these things mentioned can affect your premiums.
- If it’s for your existing home, let your insurance company know of any changes that may improve the safety of your neighborhood. For example, additional fire hydrants or new storm drains will make your neighborhood safer.
There may be other ways to reduce your homeowners insurance premiums, so contact your insurer and ask them what you can do to save some money. Because of the increased competition among insurance companies, they’ll want to make sure they do everything to keep you as a customer.
For more insurance tips and articles, see our “Insurance” category in the list of categories in the right hand column.
If you’re a homeowner, you most certainly have a homeowner insurance policy to cover your home. Not only is homeowner insurance a necessity, lending regulations require every homeowner with a mortgage to have some form of homeowner insurance coverage. It is a vital investment you need to make in order to protect your home and everything in it against accidents and hazards like fire, storm, flood, and others. Any accidents which occur in the house or on your property should also be covered, including medical reimbursements in cases of accidents and injuries.
You may have homeowner’s insurance, however, the question is, is it the right coverage? Home owners insurance differs depending on the type of coverage included in your policy. Different areas may require different types of coverage. Areas most commonly affected with natural disasters like flood, hurricane, and storms, also have special coverage against these types of natural hazards.
A good example is the homeowners insurance policy in some states where a special section called the wind policy is included. This is especially provided for homes in areas which are often experience hurricanes. This will provide home owners the necessary coverage against a very common hazard in those areas.
Upon signing your homeowners insurance policy, you need to know what is included and not included in the coverage. This will help you decide whether to provide additional homeowners insurance for other specific coverages. Some homeowners insurance policies may not cover your home against earthquake, nuclear exposure, and tsunami. If you feel you live in an area where nuclear exposure is a known hazard or if you are along the ring of fire and may want to provide additional coverage against earthquake, try to talk about this with your insurance provider and get possible coverage for these types of hazards.
Your homeowner insurance may also provide coverage for the belongings you have within your home. However, if you have expensive and valuable items within your home which the standard home insurance policy may not completely cover, you might opt to add another type of insurance — content coverage.
Make sure you have the right homeowners insurance coverage. If you are not sure about it, always seek the help and assistance of your insurance provider.
Homeowner’s insurance can be a bit complicated. One of the best ways to make the most of your homeowners insurance is to have an up-to-date home inventory of your personal possessions.
You can also better protect yourself by knowing what’s covered and what’s not.
Here are the five most common misconceptions about homeowners insurance:
- Damaged items are replaced at cost. When surveyed, most policy holders did not know the difference between cash value vs. replacement cost. Actual cash value refers to the amount it takes to repair or replace a home’s contents after depreciation. On the other hand, replacement cost pays the amount actually spent to repair or replace the property. Replacement cost coverage for your personal items is included in some policies, but if your policy does not provide the coverage, it is typically available at an additional cost.
- Flood damage is covered. Not true. Most standard homeowners policies do not cover damage sustained by floods, even though 33 percent of policy holders think otherwise. Be sure to check your policy’s limits, and get flood coverage if you think you’re at risk.
- Mold damage is covered. Not true. Like termite infestation, mold damage is generally not covered under the typical policy, although some policies cover a limited amount of mold damage if the damage is the result of a covered water loss. Take measures to reduce your risk by:
*Moderating your home’s humidity level.
*Check for damp walls or carpets that could serve as mold breeding grounds.
*Repair water leaks promptly.
*Replace washing machine hoses on a routine basis to avoid accidental leakage.
*When leaving your home for an extended time, turn off water and drain pipes.
- Sewer backups are covered. Not true. Sewer backups are generally excluded from most policies, but some companies offer extra coverage for damage caused by water or sewage which backs up from off the homeowner’s property.
- Earthquake damage is covered. Not true. As with floods, standard insurance policies generally don’t cover earthquake damage, so if you feel your house is at risk, you may want to purchase a separate Earthquake endorsement to make sure you’re protected.
If in doubt, ask! Check with your insurance provider BEFORE disaster strikes and you find out you’re not covered for that.
Do you know your insurance score? Most people don’t even realize they have one until they receive an “adverse-action” notice in the mail notifying them that, based on their insurance score, they don’t qualify for the lowest pricing available from their insurance provider.
The adventure begins by following the letter’s instructions to call the listed 1-800 number to receive a free copy of your credit report – which apparently has some effect on the score. You may wait several weeks for a reply, only to be sent a consent form that reads like an identity thief’s dream: the form will request detailed proof of identification, including photocopies of your driver’s license, in addition to your social security number and your insurance information.
If after gathering all of that information you are brave enough to send it off through the mail, the packet that you get back will simply summarize your credit rating, with absolutely no information about your insurance score.
If you persist and contact your insurance company, it will likely tell you that 99% of its clients do not qualify for the company’s lowest rate, and to qualify, your credit must be absolutely perfect. In other words, even if you carry no balances on your credit cards, own your home free and clear, are completely debt free and have a credit rating in the high 700s, you’re still unlikely to have an insurance score that qualifies you for the lowest available insurance rate. So what exactly is this mysterious insurance score, and what exactly is its reason and purpose?
A perfect insurance score, in the eyes of an insurance company, represents a client with the lowest possible risk of filing a claim, so – since the probability of filing a claim is based on credit – good credit is the key to a high score. A good credit report can have such a large impact on your insurance premium that you can, for example, have a flawed driving record but good credit and pay less for your car insurance than a driver who has a perfect driving record but bad credit. Do keep in mind, however, that your insurance score is not the only factor that determines your premium (you can ask your insurer for more details on what the other factors are).
Even after finding out about an imperfect insurance score, you may find the effort needed to perfect it is not worth what may amount to relatively small savings in premiums. (Remember, your insurance score is not the sole impact on your premium.)
The use of credit history to determine insurance premiums is quite alarming to many consumers, particularly to those who have never filed an insurance claim but still don’t qualify for the lowest available pricing. Unfortunately, insurance scoring is a standard practice among the ranks of the nation’s largest insurers.
With that in mind, the best way to help keep your insurance premium low is to keep your credit score high. Take the same amount of caution with your credit score as you would with your driving – being responsible with both can save you serious amounts of money in insurance premiums.
The House of Representatives passed yet another short-term re-authorization of the National Flood Insurance Program. The most recent extension will keep the program going through November 18. This is just the most recent in a series of short-term extensions to the NFIP. Apparently there are legislative efforts to extend the program for the next five years.
No bank will lend on a property in a flood-prone area without flood insurance. So when the NFIP lapses (as it did last year), it makes it nearly impossible to sell a home in a flood area, and any scheduled sales are held up due to the lack of insurance. Regardless of whether it makes sense for the government to encourage people to build homes in a potential flood zone is a separate issue, because these houses already exist and are dependent upon the NFP. This is the system we are largely stuck with.
In light of this, some groups, such as the National Association of Realtors (NAR), are advocating for a long term extension of the NFIP. In a press release, the NAR stated that “the NAR strongly supports the NFIP and believes that a 5-year extension of the program’s authority to issue flood insurance is essential to a properly functioning real estate market”.
There really is no excuse for Congress not to extend the NFIP as the many real estate transactions are utterly dependent upon it. Since 2002, the program has been allowed to lapse 11 times, and then retroactively re-authorized.