Most people think of insurance as a luxury. In reality, insurance is an absolute necessity. Home insurance is one of the most essential components for safeguarding your home. Mortgage companies won’t sanction a loan or agree to finance your home unless you can provide proof of coverage on the property you plan to purchase. Although it is an essential need, purchasing the right homeowners insurance policy can be an expensive affair.

Homeowners who have their property situated in high risk areas like districts with high crime rate or earthquake prone zones end up paying premium which totals a few thousand dollars at the end of the year. Even homes located in relatively peaceful and disaster free areas may attract yearly premiums ranging between $800 and $1000. Since you can’t afford to skip out on buying home insurance, it is a better idea to tune your coverage and reduce your spending.

  • Survey – Take some time to familiarize yourself with the different insurance companies and the products they are offering. Check the yellow pages or consult the State Department of Insurance or the National Association of Insurance commissioners. They will be able to provide you details regarding insurance companies, rates and reviews. Contact at least 3 or more insurers and ask them for quotes. Compare and contrast all the data that you have gathered and use it to make an informed purchase decision. This process will help you find the best coverage at the lowest rate.
  • Multi-policy discounts – Take advantage of multi-policy discounts and any other discount being offered by the insurer. Most insurers would provide a discount of 10% or upwards in case you choose their service to cover other risks under the same roof. Most insurers would provide such a discount by packaging auto insurance along with homeowners insurance. This not only lowers the cost of your home insurance, it also manages to bring down your overall insurance spending.
  • Raise deductible – This is true for any and every type of insurance. If your deductible is high, your premium will always be low. When you sign on the policy document, make sure that you set the deductible to an amount of your choice. In most cases, the deductible is set between $70 and $120 by default. Don’t set the deductible too high. You just might have trouble finding coverage for smaller claims. You also need to think of your future financial condition when you are setting the deductible.
  • Pay off mortgage – Even though this factor has no quantifiable basis for helping you reduce your insurance cost, it does have a psychological benefit attached to it. Most insurers would assume that you will take better care of the home if you own it outright and it also establishes you financial credibility since you have paid off your mortgage. This simple bit of psychological reasoning will induce insurers to charge you a lower premium rate.
  • Security upgrade – Insurers prefer to insure people who are least likely to need insurance. In other words, it means that the more secure your home is the better premium rate you are likely to get. Installing dead bolt, security cameras, burglar alarms and other security systems will encourage the insurance company to offer you a much lower rate. Some insurance companies will even offer you a discount of 5% or more in case your security system measures up to their standards.
  • Safety upgrades – Installing extra safety features will also attract lower premium rates. Fire alarms, smoke detectors, circuit breakers, surge protectors and ground fault circuit interrupter (GFCI) enabled electricity outlets are some of the home safety features which lower the risk of household accidents and disasters.

It is an established fact that home insurance is indispensable. You should essentially review your policy every quarter and make necessary changes to include coverage for new upgrades and additions to your home. Photograph and tape the contents of your home and keep them along with the original policy document in a bank safety deposit box. This will ensure that you have a record of everything that you may potentially lose due to an accident.

Sorry, no comments yet.

Write Your Comment

Comment Guidelines: Basic XHTML is allowed (a href, strong, em, code). All line breaks and paragraphs will be generated automatically.

You should have a name, right? 
Your email address, I promised I won't tell it to anyone. 
If you have a web site or blog, you can type the URL right here. 
This is where you type your comments. 
Remember my information for the next time I visit.