SAVING MONEY ON HOMEOWNERS INSURANCE STARTS WITH RESEARCH.
Homeowner’s insurance is expensive, can be complicated and often times is confusing. Saving money on your homeowners insurance begins with research and understanding coverages and exclusions. Most first time home buyers, life-long home owners, and renters would be hard pressed to tell you what their actual home insurance covers, conditions for claims and the fine print exclusions.
4 Components of a Standard Homeowners Insurance Policy
Most likely you have a standard insurance policy that covers the dwelling, other structures, loss-of-use, and personal property. If you have a pool, trampoline, workshop, or valuable artwork you can expect to add riders to your policy to cover these features or assets. Read more about these exclusions below.
This coverage is for repairing or rebuilding your home from the ground up in the event a disaster strikes. Many homeowners do not review their policies on a semi-annual basis, thus leading them to be under insured. According to Nationwide, about two-thirds of American homes are underinsured, by an average of more than 20%.
Detached garages, fences, and garden sheds fall under this category.
As the name implies, this covers the cost of alternative housing should you not be able to live in your home while it is being repaired. That may be a hotel or a rental home. Typically, there is a food and utility allowance as well. You can learn more at Policy Genius.
Your valuables and belongings are covered in this part of your policy. If you have extraordinary items, you’ll need to be sure they are documented and disclosed to your insurer. Your cell phone is your best friend. Take a movie of all your belongings, room-by-room, and then upload that file to the cloud for safe keeping. Hopefully you will not need it, but it’s there if you do.
The Balance offers up seven home inventory apps to help you document your personal property.
TOP HOMEOWNERS INSURANCE CLAIMS
The top three insurance claims according to the Insurance Information Institute are:
- Fire and Lighting – Average claim is $68,322.
- Bodily Injury and Property Damage – Average claim is $26,085.
- Water Damage and Freezing – Average claim is $10,234.
As always, check with your insurer annually to be sure you have the coverage you think you have and to understand those pesky fine print exclusions.
Common Standard Homeowners Insurance Policies Exclusions.
Flood damage is not typically included in a standard homeowner’s insurance policy. Damage from flooding does not necessarily mean from rising river or creek waters. Flood damage could come from water running off a hill or a rain event. Most policies do not cover flooding as a result of ground water seepage, water backup from sewage, or overflow from a sump pump.
Sewer backups are tricky as to where the source of the backup originates. Is the backup outside of your home or inside? In both cases you need to know if and how you are covered. Locally, Louisville Water Company offers insurance to cover your sewer and septic lines.
Some policies will cover you should your pet bite someone. The caveat is some policies will exclude the claim if your pet falls into a breed category that is deemed aggressive.
Trampolines and Pools
Kids love them. Insurance companies not so much. You have them, you’ll likely need a rider on your policy. Some insurers will not cover your property if you have them.
Renovations and DIY
If someone is on your property working, be sure you have a copy of their insurance certificate. There is a case of a person who did one day of yard work for a homeowner. That worker claimed he was injured while doing the yard work. It did not turn out well for the homeowner. If you cause damage to your home while doing a DIY property, you may be surprised that you are not covered.
Suffice it to say, understand your homeowner’s insurance limits. Not doing so can be quite costly.
6 Tips for Reducing Homeowners Insurance Costs
1. Bundle Auto and Homeowners.
Insurers almost always give a discount if you bundle your auto and home together.
2. Shop Around.
Not all risk departments at insurance companies are created equal. Shopping around can pay big dividends. Be sure to shop your insurance every two years. Rates change, and you don’t want to be overpaying.
3. Ask for Discounts
Military, teachers, AARP are just a few affiliations that may get you a discount.
4. Up Your Credit Score
Insurance companies look at your credit score as part of their assessment of you as a risk. Higher credit scores get lower rates with insurance and mortgages.
5. Home Features
If your home has fire extinguishers, security systems, storm resistant windows are just some of the features that can get you a discount. Check with your agent.
6. Increase your Deductible
Raising your deductible in increments of $500 can make a difference on your premium. Your agent will help you understand the difference a $500 deductible compared to a $1,000 deductible will make.
The Last Word on Reducing Your Homeowners Insurance Cost
It takes time and perseverance to shop rates and compare coverage. Don’t press the easy button. The savings can add up quick and over time you can save a substantial sum of money on your homeowner’s insurance. Don’t forget to repeat this process every two years, or annually if you’re a high achiever.