Insurance is a very competitive business and the price you pay for your homeowners insurance can vary by hundreds of dollars, depending on the insurance company from which you purchase your policy. Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. That's why you should ask your agent about any discounts which may apply to you. Here are some things to consider when buying homeowners insurance.
Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around. Ask your agent about which companies will best suit your needs and your pocket-book. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don't shop price alone. The company you select should offer both fair prices and excellent coverage. Quality coverage may cost a bit more, but provides many added conveniences.
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay according to the terms of your policy. Deductibles on homeowners policies typically start at $250. By increasing your deductible to $500, you could save up to 12%; $1,000, up to 24%; $2,500, up to 30%; and $5,000, up to 37%, depending on your insurance company.
Most companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. Having multiple policies from a single company also simplifies payments, renewals, and claims processing.
Consider how much insuring it will cost. Because a new home's electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house, insurers may offer you a discount of 8 to 15 percent if your house is new.
Check its construction, too. Brick, because of its resistance to wind damage is better in the East; frame, because of its resistance to earthquake damage, better in the West. Choosing wisely could cut your premium by 5 to 15 percent.
Does your town have full-time or volunteer fire service? And is your house close to a hydrant or fire station? The closer your house is to firefighters and their equipment, the lower your premium will be.
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you'll pay a higher premium than you should.
You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems aren't cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you'd save on premiums.
Smoking accounts for more than 23,000 residential fires a year. That's why some insurers offer to reduce premiums if all the residents in a house don't smoke.
Retired people stay at home more and spot fires sooner than working people. Retired people have more time for maintaining their homes, too. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.
If you've kept your coverage with a company for several years, you may receive special consideration. Most insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.
Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues.
You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $20,000 you paid for it, you'll want to reduce your floater and pocket the difference.
If you live in a high-risk area --- say, one that is especially vulnerable to coastal storms, fires, or crime --- and have been buying your homeowners insurance through a government plan, you should check with an insurance agent or company representative. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market.