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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:
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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.
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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.
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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.
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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.
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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.
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Check on group coverage resources. Check with employers,
alumni and business/trade associations who often negotiate insurance
packages with companies at competitive rates.
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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.
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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.
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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.
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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.
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Cover your home office. Don’t assume automatic
coverage. Premiums may not be as high as you’d expect,
and protect business risks.
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Don’t smoke. Some insurers offer premium incentives
to nonsmoking households.
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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.
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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.
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