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Twelve Ways to Save Money
on Your Homeowners Insurance

The price you pay for your homeowners insurance can vary by hundreds of dollars depending on a number of factors, including the company you buy your policy from. Since many home buyers have the insurance lumped into the monthly mortgage payments, a high premium can make timely payments a struggle. There are ways to cut those insurance bills.

Here are 12 steps you can take to help you SAVE MONEY on your homeowners insurance

1. SHOP AROUND
It'll take some time, but could save you quite a bit of money. Ask your friends, check the Yellow Pages or call your state insurance department. You can also access insurance information for your state on the Internet at www.naic.org/cis/. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.

Also check consumer guides, insurance agents, companies and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices.

But don't consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you need assistance in filing a claim. So, talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Speak to neighbors who you know have had the need to file a claim. If they had a bad experience, chances are that you will too.

Check the financial ratings of the companies with AM Best or Standard and Poor's.

2. RAISE YOUR DEDUCTIBLE
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums.

Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent.

Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the coast in the East, you may have a separate windstorm deductible, if you live in a state vulnerable to hail storms, you may have a separate deductible for hail, and if you live in an earthquake-prone area, your earthquake policy has a deductible. Talk to the broker about the fine print before you make your final decision.

3. BUY YOUR HOME AND AUTO POLICIES FROM THE SAME INSURER.
Check with your auto or life insurance broker. Many companies offer better rates to long term customers or those holding multiple policies. Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverage from different companies.

4. MAKE YOUR HOME MORE DISASTER RESISTANT.
Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. Paying for improvements may seem hard in the first years of home ownership, but the reduction in insurance premiums - and energy bills - might make this an improvement that pays you money.

5. DON'T CONFUSE WHAT YOU PAID FOR YOUR HOUSE WITH REBUILDING COSTS
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should. To find out what the cost of the land is, contact your local tax assessor or ask your real estate agent.

6. IMPROVE YOUR HOME SECURITY
You can usually get discounts of at least 5 percent for a smoke
detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren't cheap and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you'd save on premiums. You may find out that the savings will more than pay for the system you'll install!

7. SEEK OUT OTHER DISCOUNTS
Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. That's why you should ask your agent or company representative about any discounts available to you. For example, since retired people stay at home more than working people, they are less likely to be burglarized and may spot fires sooner. Retired people also have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. The company will not volunteer these facts - it's up to you to make sure you get all the information.

8. SEE IF YOU CAN GET GROUP COVERAGE
If your employer administers a group insurance program, check to see if a homeowners policy is available and is a better deal than you can find elsewhere. In addition, professional, alumni and business groups often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues. If you are self employed, check for associations where you may qualify for membership. Writer's unions and other freelance groups often offer reduced insurance rates to members.

9. STAY WITH THE SAME INSURER
If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. But make certain to periodically compare this price with that of other policies. A discount that leaves you paying more than other companies are charging is no bargain. If you find that this is the case - speak to the broker.

10. REVIEW THE LIMITS IN YOUR POLICY AND THE VALUE OF YOUR POSSESSIONS AT LEAST ONCE A YEAR
You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you'll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies) and pocket the difference. Be sure to take into account the cost of electronics in your home. Many companies have a special rider for this which may save you some on premiums.

11. LOOK FOR PRIVATE INSURANCE IF YOU ARE IN A GOVERNMENT PLAN
If you live in a high-risk area -- say, one that is especially
vulnerable to coastal storms, fires, or crime -- and have been buying, your homeowners insurance through a government plan, you should check with an insurance agent or company representative or contact your state department of insurance for the names of companies that might be interested in your business. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market. If you do decide to switch - read the fine print BEFORE you sign.

12. WHEN YOU'RE BUYING A HOME, CONSIDER THE COST OF HOMEOWNERS INSURANCE.
You may pay less for insurance if you buy a house close to a fire
hydrant or in a community that has a professional rather than a
volunteer fire department. It may also be cheaper if your home’s
electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it's more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5 to 15 percent.

Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, you'll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at www.fema.gov. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area.

If you have questions about insurance for any of your possessions, be sure to ask your agent or company representative when you're shopping around for a policy. For example, if you run a business out of your home, be sure to discuss coverage for that business. Most homeowners policies cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance. Although you want to lower your homeowners insurance cost, you also want to make certain you have all the coverage you need.

Courtesy of Federal Consumer Information Center

also see -> Property Checklist Makes Filing Claims Easier

also see in Your Money -> Insurance