It’s important to protect the things you value. As with any insurance purchase, it’s also important to evaluate coverage and research your options to find the best coverage for your dollar. Here are some tips from the National Association of Insurance Commissioners (NAIC) to help save money on your homeowners insurance.
1. Shop Around
It’ll take some time, but could save you a good sum of money. Your friends may be one of your best resources. Call them to see if they’re happy with their company and if they feel the rates are fair.
Also check consumer guides, insurance agents, companies and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don’t consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. Ask the agents what they would do to lower your costs.
2. Stick with the Company that Offers the Best Deal
Once you’ve considered the alternatives and chosen the company that fits your needs, consider multiple policies with that company.
Some companies offer what is called a multi-policy discount. If you purchase your homeowners and automobile policies from the same insurer, you may receive a small discount.
3. Pick Your Form
The five homeowners package forms offered to owners of single-family, owner-occupied homes are HO-1, HO-2, HO- 3, HO-3 with HO-15 and HO-8. For a description of the differences in these policies, visit this website:
http://en.wikipedia.org/wiki/Home_insurance
The more perils your policy covers, the more you will pay for the policy.
4. Change Your Deductible
If your policy contains a standard “all peril” deductible, of $250 for example, you would collect the amount of any covered property loss, less $250. With a deductible, the premium cost of your policy is lower than if there were no deductible. In choosing the deductible amount, you bear the burden of loss up to the amount you feel you can afford. Deductibles save money because the first dollars of the insurance are the most expensive to buy. Contact your insurance company to see if they offer higher deductibles, such as $500 and $1,000, on your homeowners insurance coverage.
5. Discount Opportunities
You should also check with your insurance company to see if they offer premium discounts for the use of dead-bolt locks, smoke alarms, fire extinguishers, sprinkler systems and security systems.
Insurers in some states are required to offer premium discounts if a policyholder has installed hurricane/storm shutters and/or hurricane resistant laminated glass windows and doors. Check with your agent to find out what additional discounts are available under your policy.
6. Actual Cash Value vs. Replacement Cost
One important factor to consider when shopping for your homeowners insurance policy is “actual cash value” vs. “replacement cost” coverage. While it may not affect your short-term premiums, it may make a large difference in your claim submission.
Actual cash-value coverage, as the name implies, will reimburse you for the cost of the property at the time of the claim, minus your deductible. It’s important to account for depreciation when considering this coverage option. For example, if you lose an audio system that was purchased five years before the claim, you will be reimbursed for the current value of the system. This may result in a lower claim payment than you expect.
Replacement cost coverage, on the other hand, will reimburse the full value of the new audio system — after you purchase the new system and submit your receipts. While the up-front cost is greater, you are more likely to receive accurate compensation for your possessions.
7. Get More Information
For more in-depth information on homeowners insurance, order a copy of the “Consumer Guide To Homeowners Insurance” from the NAIC at http://www.naic.org/1pubcat/
If you feel you’ve been treated unfairly in shopping for homeowners insurance, please contact your state insurance department.
8. Check the Company
Before deciding on an insurance company here in Colorado, be sure to check Colorado’s Department of Regulatory Agencies (DORA) “Complaint Ratio and Complaint Index Information.” Go to:
http://www.dora.state.co.us/pls/real/Ins_Comp_Ratio_Report.Home
This is an online interactive report search that allows you to obtain complaint ratios for a variety of companies. The various reports are found in the links at the bottom of the page.
Additional Resources:
Insure U offers unbiased and trusted consumer resources from the National Association of Insurance Commissioners (NAIC). The program’s website provides consumers with helpful tips and information about insurance — and because individual coverage needs vary, materials are provided for various life situations.
http://www.insurance.insureuonline.org/
Another good resource can be found at this site:
http://www.dummies.com/how-to/content/how-to-evaluate-insurance-quality.html
This article focuses on evaluating insurance quality and offers numerous resources to assist in your search.
Another outstanding resource is the Rocky Mountain Insurance Information Association. Their website can be found at:
At this website you’ll find insurance information that is specific to our Rocky Mountain region.
Enjoy!
Dave