How to Save Money on Homeowners Insurance

Ohio home owners historically pay some of the lowest insurance premiums in the US. However, these premiums are on the rise after years of being artificially held down in part by being subsidized by other insurance lines. In recent years, a downturn in investment returns, increasing claims and hikes in factors affecting homeowners insurance are resulting in premium increases. Between 1991–2000, insurers paid $1.16 for every dollar collected in homeowners insurance premiums.

To help keep premiums affordable:

• Shop around. Contact several insurance companies and agencies to discuss coverage, costs, claims handling and service. Provide identical information regarding the types of coverages and limits you want and extra coverages such as earthquake or sewer drain backup, an umbrella policy, coverage for collectibles or fine jewelry, or a flood insurance policy. Check company financial ratings for stability. Ask others for recommendations and use the Internet for reviewing potential insurers.

• Protect your home against typical perils. By preventing losses and claims, you can help to keep the cost of insurance down. These include:
  - Keep fire extinguishers in fire-prone areas such as the kitchen and laundry.
  - Replace old, faulty wiring and make sure to tell your insurer.
  - Regularly check your roof, down spouts and pipes for clogs or leaks.
  - Discourage crime by using exterior lights at night and deadbolt locks.
  - Repair loose railings, steps or walks.

• Ask about available discounts. Some companies provide discounts typically in the 8–15% range for new construction, since newer homes are built to updated building codes and standards. Some insurers offer discounts for monitored home security systems. If you’ve had your home insured with the same company or agency for several years, you may also be eligible for an additional premium discount.

• Raise your deductible. By raising your deductible, you’re responsible for smaller losses, lowering your premium and chances for frequent claims. Raising a deductible from $250 to $500 could lower your annual premium as much as 12%. A $1,000 deductible could mean as much as a 25% savings.

• Review your policy annually. Correct and/or update the information. Double-check the information regarding how far your home is from a water source such as a fire hydrant, as well as the location of the nearest fire station. If you carry an insurance endorsement on an item that’s depreciated, reduce or eliminate the endorsement that covers it.

• Buy all insurance products from the same source. Companies or agencies that provide insurance for your home, auto, life and/or health offer multiple policy discounts.

• Check on group coverage resources. Check with employers, alumni and business/trade associations who often negotiate insurance packages with companies at competitive rates.

• Don’t over-insure. Your land is included in your home’s market value, but not when deciding how much insurance coverage you need to buy.

• Opt for guaranteed replacement cost. Although more expensive, you’re better off in the event of a major loss. A “replacement cost” policy pays to replace the damaged property or loss, regardless of its age and condition, with materials of similar kind and quality. An “actual cash value” policy provides reimbursement at the depreciated value.

• Contact the Ohio Department of Insurance for a free homeowners insurance guide. It provides all types of information, including average premiums by company. Call 1-800-686-1526 for a copy or download it from www.ohioinsurance.gov.

• Avoid frivolous claims. Submitting a claim after years of paying premiums is justifiable, but frequent claims may mark you as a high risk. Consider personally paying for smaller losses.

• Cover your home office. Don’t assume automatic coverage. Premiums may not be as high as you’d expect, and protect business risks.

• Don’t smoke. Some insurers offer premium incentives to nonsmoking households.

• Stay with your insurer. Some insurers reduce premiums by 5% after three to five years, and up to 10% if you remain a policyholder longer.

• Keep tabs on your credit. An Insurance Bureau Score (IBS) is a snapshot of your insurance risk picture based on information in your credit report. Some companies take insurance scores into account when assessing a potential homeowners insurance risk. IBS reflects your credit payment patterns over time, with more emphasis on recent information. For more information on credit and insurance scoring, including credit review tips and Web site links, click here.