Watching What You Pay on Homeowners Insurance

by Justin Weinger on September 16, 2011

Many homeowners don’t realize how much their homeowners insurance can cost. According to the Insurance Information Institute, the average premium in the United States is $481. Rates tend to fluctuate substantially.

Taking the time to understand how insurance works can help you cut your premiums by 50% or more. Before you take out a policy, you need to take a few things into consideration.

First of all, you need to make sure you know what you are insuring. You want to make sure your insurance covers the cost of rebuilding your home if anything happens. You also want to protect any property you keep in your home.

Many people think they need to insure their home for the same value they paid for their house. Remember that the price of your house included any land you purchased. You aren’t going to need to rebuild your land if your house catches on fire or is damaged by an earthquake. It makes no sense to calculate that into your insurance.

Estimate the cost of rebuilding your house. That should be the figure you use when you want to use for your insurance calculations. You also need to make sure you are purchasing your insurance through a company that charges reasonable prices for good coverage. Insurance is regulated through insurance departments, so you can ask them if any companies have received any complaints.

You can consider saving money by paying higher deductibles. Paying a deductible of $1,000 can shave off a quarter of your monthly premiums. However, you don’t want to get carried away with raising your deductible. If anything happens, you want to make sure you can afford the deductible. For example, if someone breaks into your house and steals your computer, you probably won’t get much to replace it if you have a deductible of $1,000 or more. Make sure you will be able to make the payment if anything happens.

You should also make sure your home is as secure as possible. Adding simple security systems such as smoke detector or dead-bolt lock can save you at least 5% on your insurance premiums each month. A more complex system can save you as much as a fifth from your insurance premiums. Make sure you consider the cost of installing these systems and decide if it is worth the savings you will accumulate over the months. Of course, you can never put a price on the peace of mind of knowing your family and your home are safe from the start.

You should also be loyal to your insurer. Consider paying for both your auto and homeowners insurance through the same insurer. This will save you a lot of money. You also want to try to stay with the same insurer, because they often give you a discount for being a loyal, long-term customer.

Homeowners insurance may seem expensive, but you can save a lot of money understand the discounts your insurer offers. Speak with your insurer about any potential discounts and what you need to do to earn them.

Kalen Smith writes about money saving tips and budgeting at a personal finance website in the saving and financial advice sector. Kalen also writes about credit cards, investing, mis-sold mortgages, unfair loan agreements and credit rating advice.

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