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STEP 8

OVERVIEW

Homeowner’s insurance protects you financially against fires, theft, or disasters suffered by your home. A standard policy covers the dwelling itself as well as your belongings. It’s a package policy, which means it covers not only the property but protects you against legal responsibility for injuries you or your family members cause to others. Damage from most disasters is covered, but earthquakes, floods and poor maintenance usuallyrequire separate policies.

Lower Your Homeowners Insurance Costs

You may be able to save hundreds of dollars a year on homeowners' insurance by shopping around. The Insurance Information Institute recommends considering the following tips when choosing the proper homeowners insurance policy:

1. Shop for the Right Policy

Don’t make a hasty decision. Check references, ask your friends, and get multiple quotes. This will give you an idea of what prices are fair and what types of services you can expect if you ever need to file a claim.

2. Choose a Higher Deductible

Deductibles are the amount of money you have to pay for a loss before your insurance company begins paying your claim. A higher deductible means you’ll have a lower premium because you’ll be absorbing more of the risk, but the savings might make it worthwhile.

3. Insure Your House, Not the Land Under It

The land that your house is built on isn't at risk from theft, fire, or other perils covered by your homeowner’s insurance policy. If you buy coverage based on the value of hour dwelling and the land it’s on you’ll pay a higher premium than you should.

4. Benefit from Multi-policy Discounts

If you buy your homeowner’s, auto, and liability policies from the same insurer, you may realize substantial savings. It is not uncommon to save 5-15% when buying two or more policies from one company. But, make sure the discounted combined price is still lower than buying different coverages from different companies.

5. Make Your Home More
Resistant to Disasters

Learn about the steps you can take to make your house more resistant to natural disasters. You may beable to save money on your premiums by upgrading materials, adding features, or retrofitting. Modernizing your home’s HVAC or electrical systems can lessen the risk of fire and water damage.

6. Improve Your Home’s Security

Smoke detectors, alarm systems, or dead-bolts can usually get you at least a 5 percent discount. Sophisticated sprinkler or burglar alarm systems can sometimes cut your premium as much as 15 or 20 percent. It’s always wise to compare the cost of these improvements to the potential savings before deciding to upgrade.

7. Look for Discounts

Discounts may be available and it pays to look for them. For example, if you’re retired and stay at home more, you might get a special rate. People who are at home more are less likely to be burglarized and may spot fires sooner. Retired people also have more time to maintain their homes. Simple being 55 or older may qualify you for savings with some companies.

8. Maintain Good Credit

Establishing a solid credit history can save you money in many ways and home insurance can be one of them. Insurers are increasingly using credit profiles to price insurance for homeowners. To ensure that your credit score remains high, pay your bills on time, don’t get overextended, and keep your credit balances low.

9. Don’t Change Insurers

If you’ve been the customer of a particular insurance company for many years, you may already be receiving a discounted rate. Long-term policyholders often see premium reductions of 5% after three tofive years and by 10% after six years. You’ll still want to compare your company’s best rates with those of other carriers.

10. Do an Annual Review of Your Policy

Things may change over time and you should make sure that you’re insured properly over time. Consider your coverage every time you make a new purchase and also think about whether insured contents on your floater policy are losing value each year.

11. Always Look for Private Insurance

If your home is in a high risk area, you should check to make sure private insurance companies offer policies in addition to government plans. You may find that there are ways to save money going the private route.

12. Consider Insurance Costs
When Buying a Home

The Comprehensive Loss Underwriting Exchange (CLUE) will have a report of the home you are thinking of buying. It contains the insurance claim history of the home and can help you decide whether the home is problematic or a risky purchase. Remember that flood and earthquake damage are not covered by a standard homeowners policy. The cost of a separate earthquake policy will depend on the likelihood of earthquakes in your area. Homeowners who live in areas prone to flooding should take advantage of the National Flood Insurance Program. Just because the home you’re buying hasn’t experienced a flood in the past, doesn't mean it won't in the future. Flood risk isn't just based on history, it's also based on a number of factors: rainfall, river-flow and tidal-surge data, topography, flood-control measures, and changes due to building and development.