subject: Homeowner's insurance too high? [print this page] Homeowner's insurance too high?
HO-3
The most popular type of home insurance is called HO-3. This kind of policy offers property protection and liability insurance. Property protection means that you will be reimbursed for losses or damages to the house and its contents. Liability Insurance protects you against personal liability, medical payments for injuries to others and damage to other people's property. There are policies with more extensive coverage and are usually called "deluxe" or "executive" policies. If you do major remodeling to your home, make sure you upgrade your coverage. If you have an office in your home, you might want to consider special insurance for your computer equipment.
Ways To Reduce Costs
One: Raise Your Deductible. Deductibles are the amount you must pay towards a loss before your insurance company starts to pay. You can save costs on your overall policy by increasing the amount of your deductible. For example, according to a Federal Government paper on lowering insurance costs, you can save up to 12% on your rate if you go with a $500.00 deductible rather than a $250.00 deductible.
Two: Bundle your insurance policies. Some companies that sell homeowners insurance also sell auto and liability coverage and will take 5% to 15% off your premium if you buy two or more policies from them. Bundling your insurance policies can also make it easier to keep track of policies and pay the bills.
Three: Reduce Your Risk. Find out from your insurance company what steps you can take to make your home more resistant to natural disasters. If you live in an older home, look into modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. It is possible in come cases that while reducing your risk, you may also increase the value of your home. For example, replacing a wood shake roof with a fire resistant type of shingle.
Four: Home Safety Measures. You can usually obtain insurance discounts for having a smoke detector, burglar alarm or dead-bolt locks. However, take note that some fire systems can be costly and not every system may qualify for an insurance discount, so check with your insurance company first.
Five: Don't Over-Insure. Homeowner's insurance is designed to protect you against loss should your home and furnishing be damaged or lost through theft, windstorm, fire, accident, etc. The land under your home is not insured, as it is not at risk. If, in considering value, you include the cost of the land under your house, you may end up paying a higher insurance premium than you should.
Remember: Flooding and earthquake damages are not covered in standard homeowners' policies. If your home is in an area that the government designates as "flood-prone," you may be able to purchase flood coverage through the national Flood Insurance Program (NFIP).
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