Guest post by Jennifer from Savviest Girl
As a former real estate agent living on an island in coastal South Carolina, I am far too familiar with the quirks of Homeowner’s Insurance. Exclusions for mold, separate wind and hail policies, and insurance not written during a named storm are just a few of the interesting issues I’ve come across.
Here are a few ways to save money:
1. Raise the Deductible
Some insurance policies have deductibles as low as $500, but raising the deductible may be the better choice in the long run. Consider putting the money saved on the policy into an emergency fund.
2. Look for Discounts
Are you a member of the military or a member of a union? There may be discounts available for you. Fire hydrants, nearby fire stations, generators, and a security system can also add up to big savings in the form of discounts on the policy.
I had a Certified Wind Mitigation Inspector check my home for wind mitigation items such as certain framing techniques and impact resistant glass. I paid the inspector $50 dollars and saved 20% off my policy! Ironically, the qualifying discount items were code for homes built in 2008 or after. While this may only apply to people living in coastal areas, it is worth exploring any discounts available.
3. Shop Around
Don’t be afraid to shop around. A few phone calls may save hundreds of dollars!
All insurance policies are not created equal. Be careful to consider not only the price, but also the deductible, exclusions, and various itemized amounts such as loss of use or content value. Consider discussing “loyalty” with the insurance agent for an additional deduction.
While saving money is important, it is also comforting to know how an insurance company will handle claims. Talk to friends, family, and neighbors about their experiences with insurance companies before making a commitment.
4. Bundle
Do you bundle your utilities to save money? This is the same idea. Talk to the insurance companies about combining policies for vehicles, homeowner’s, and other policies in order to maximize the discounts.
Other suggestions:
- Confirm exclusions, and get extra insurance if necessary (flood, wind & hail and earthquake).
- Upload a video inventory of the home’s contents to a secure location.
- Know the difference between replacement costs versus value. The house should be insured for what it would cost to replace it if it were destroyed. Remember, in the event of a major natural disaster, building supplies and labor costs will increase.
Jennifer Bell, a former teacher and a former real estate agent, is a wife and mother of four children. She recently started Savviest Girl–a blog that focuses on money-saving and money-making information for young adults.
Wondering if anyone has ever had this happen– we just purchased our first home last year– two weeks into home ownership a storm blew a tree onto our home– just knocked down a gutter thankfully. We called our home insurance– they sent a check for $500 (covered *most* of the job to fix it). HOWEVER– when it came time to renew our insurance, we were hit with some type of claims fee for the next three years!! We will now end up PAYING THEM 3x the amount they paid us!! Rip off!! I am so furious.
i’m not sure if anyone has mentioned this or not, but my insurance company offers a discount for having a fire extinguisher in the house. it’s not much of a discount, but it’s definitely more than the cost of a small extinguisher, and that is a one time cost!
For starters, you can get a percentage off (depending on your company) for having an alarm system in your house.
Also, in TX there’s a free program through the police dept. to help you get a discount. They send someone from the crime prevention unit to your house to check it for security. If it passes, you’ll get 10% off your insurance (again, I’m guessing it depends on your company).
That program is free, and they’ll even tell you what you need to fix to get your house to pass and come out again. It’s a good thing to do anyway 🙂
Every year when my new policy comes in the mail I phone up and ask an agent to review on the phone.Doing this process has continued to keep my policy from increasing in costs.
The policy I have is issued because I belong as an Alumni from a university I graduated from . I have had it checked with a few insurance companies (shopping the particulars to compare).No other company could come as close to insuring for the cost for the amount of coverage.
So,check any educational,service group,professional organization you and sometime sother family members belong to. You may also be eligible.
When I started phoning they said because I had not claimed in the history of my account (10+) years I received a discount.Also for,smoke alarms,fire hydrants,repairs done to home,alarm system.
Also if you have no mortgage on your home you may also be eligible for a discount. We did, I mentioned this and received a further discount.
i am a personal lines insurance underwriter. a few more comments about discounts:
is your home alarmed? some companies give credits for having smoke detectors and carbon monoxide detectors in the house. but bonus points if you have central station monitoring – a company like ADT or Brinks, where the alarm system reports to a company who can respond quickly if you are away from the house. they usually do fire and/or burglar alarms. back-up generators, lightning rods, water shut-off valves are all things that some companies give homeowners discounts for. is your property fully fenced and the driveway gated? ask your agent for a discount. companies give all sorts of credits.
on the auto – if your car is older and not worth very much money anymore (check kelly blue book or NADA) you might want to drop physical damage coverage. if you have a bad accident (or comprehensive claim) just replace the car. if you have kids driving, check and see if your company offers credit for driver training (either thru a driving school or just drivers ed in HS). they may also give a “good student” credit if your kid has a B or better GPA. if the kid is away at college (usually 100 miles away or further) and doesn’t have a car with him, there is probably a discount because he’s not a regular exposure. if there are drivers with multiple tickets or accidents, it might be worth it to take a safe driving course – the course will cost some money but usually there will be a discount on your insurance. drive safely to begin with – companies will surcharge you for violations and accidents, so try to avoid both. never try to save money by reducing your coverage limit – higher limits are comparitively cheaper than lower limits, and if you ever have a claim you will be thankful for the protection.
FYI
Floods – water that moves over the ground and enters your house is NEVER covered. It is only covered by a federally issued insurance policy. Same thing with earthquakes.
Why? Because floods, devastate an entire area at once. It isn’t fiscally possible for an insurance company to cover those issues.
Also, sump pump overflow- NOT COVERED You need to buy a rider.
Be sure you are getting replacement cost value, and not Actual Cash Value covereage on your home.
Actual Cash Value pays for the items lost with depreciation. Think about how much your 50 year old building materials are probably worth (very little) compared to the cost of a replacing them.
Some agents will write a policy for less than 100% of the replacement cost (80% is common). That means if you have a total loss (and a total loss doesn’t not mean that your house has burned to the ground completely- many other disasters can cause this) you will only be covered for 80% of your replacement cost.
Sadly, most people do not read their policy to see what is excluded and included. If you find a great deal just be sure that you are protected.
I agree that service is something to consider when deciding the “value” of a policy!
Has anyone ever had their policy go down in price for loyalty? I’ve only had it go up year after year! I was with one company for five years and the second for 3 years. It may just be my location! ; )
On a side note, last week I watched the flooding in Northeastern, PA near where my husband and I grew up. Over and over again, the people were saying, “We don’t have flood insurance because we were told we didn’t need it”. It was so sad. They were basing the need for insurance on the flooding which happened during Hurricane Agnes in 1972.
some companies will apply a loyalty discount in conjunction with a claim surcharge. so if you’ve only been with a company for a year or two and you have a claim they will apply a pretty big surcharge the next year, but if you’ve been with them 5 or 6 years and are just filing your first claim, the surcharge the next year may be less.
I live in a wildfire zone in Southern California. I was unable to find any normal coverage other than the $2,000 a year plan we ended up purchasing. The only other option was the state sponsored “FAIR” plan (which pretty much only covers fire), which would end up being just as expensive if we added a “wraparound” plan to cover all the things the FAIR plan doesn’t cover (theft, etc). Our house is only worth about $115,000! Our plan is with an extremely reputable company, but the premium is killing us. Is anyone else in this situation? I have called every insurance company out there and couldn’t find any other solution. Most companies wouldn’t insure us at all. (We purchased our home 2 years ago and were able to get a normal policy. They dropped us at renewal time due to the new fire zoning.)
Talking to friends is a great way to find a good company but make sure they have actually filed a claim. I was recently dealing with one of the companies that touts its caring local agents and found they were anything but. Mom had been a client for over 50 years and yet they did not recognize her name (nor could they spell it) and every communication was something along the lines of they couldn’t find the file, they didn’t see a claim in the system, could we just fax that over again or they needed to call the corporate office. Very frustrating.
Later, this same company told me that I needed to pay them $250 up front in order for them to open a claim when someone else rear-ended me (and admitted it was 100% their fault). They said that I might get that money back ‘some day’. The other driver had a different, and less advertised, company and they could not have been more helpful. They sent an adjuster over an hour away to inspect the vehicle and wrote me a check on the spot, nary a hassle to be seen.
My personal insurance is with neither of these companies but should I ever consider changing, which one do you think I will call first?
I would second the opinion that you should talk to someone who has actually filed a claim. My parents had been with the same insurance guy for over 20 years, and I had personally used his services for at least 8 (since being on separate insurance). Not only was he unable to keep our rates from going up year after year for the last 3 years we were with him, but filing a claim was awful. The claims department of his company was horrible, rude, and it took months of persistence on my part to accomplish anything.
I still like the agent as a person. He’s a great guy, but was really restricted by the company he worked for. Our coverage now is higher, has fewer exclusions, a lower deductible (still high, just not as high as before!) and costs at least 1/3 less, and we still kept it local.
It’s hard to navigate those lines of loyalty vs. keeping costs reasonable, but some of the questions in this article and the comments are good things to ask to start sorting it all out!
If you live in Florida make sure you have a Wind Mitigation survey done on your home. You can get extra discounts for hurricane protection, certain types of roofing, etc. Call your agent and they should be able to direct you to a contractor who will perform an inspection of your home. It costs about $100, but may yield a nice discount on your insurance.
Please remember that homeowners insurance rarely covers sewage problems – that falls under flood insurance. Also, earthquake insurance covers all earth movements – sinkholes, etc. A friend of mine has been an agent for 20+ years and has told us all kinds of “gotchas.” We marched right out and got both flood and earthquake insurance after that conversation!!! Glad we did given that VA just had a 5.8 quake (fortunately we did not need the insurance – THIS TIME)! Also, ask your agent to tick off a list of discounts – there may be some you don’t know about. We just got 1 for having a smoke alarm (not just a detector – an actual alarm) in our house.
Thanks for the tips. I was not aware of the generator discount. I will check into that one!
Our family also has a high deductible on our home owners insurance as well. The money for our deductible is kept in our Emergency Fund because a tree falling on your house or a car accident (both incidents have happened in the last few years in our family) are not events you can easily predict. It is a great way to save quite a bit on your insurance as long as you know you can cover the higher deductible should you need it.
I worked for several years for a Real Estate Attorney helping people with purchasing their new homes and refinancing. It became very obvious which companies gave the better rate although over the years I got a glimpse of the agencies that took better care of their clients. In my experience it is better to go with the more reputable company then saving a handful of dollars.
Shop around, but allow your current agent to see if they can help give you a discount as well.
I am an insurance agent in PA. Our companies do still offer a $250 deductible and many clients have decided to increase their deductible to decrease their premium.
But please remember this—the time that you need your agent or your company may be at one of the worst times of your life. A house fire, a tornado, a flood. Wouldn’t you rather pay a little more to make sure that the claims service is awesome and that your agent is going to be there every step of the way to make sure that you are getting the service you deserve? To me, you can’t put a price on that. Price is not always the most important thing.
Get referrals from your friends. They are usually the best place to start when shopping for insurance.
I have to second this comment. While I completely agree with the post that it’s good to check around and do what you can to reduce the insurance cost, you really can’t put a price on service. It truly is worth it to go with the reputable company that may cost a little more. I haven’t actually had an experience with having to make a claim on homeowner’s insurance (we have renter’s insurance, actually), but I have had a few experiences with car insurance claims (we have our car insurance through the same company as our renter’s insurance). I had two accidents, one which totaled my car and the other car and had the most positive experience with my insurance company. They covered everything, including the medical bills and they were wonderful to work with. The other accident was quite minor, but again the company was wonderful to work with. It really is worth it to have a good, reputable company, who really does care about their clients.
As an Insurance Agent the title of this post made me crings a little bit. I was very happy to see that all of the suggestions are very good ones. Things you need to keep in mind when looking at exclusions are siding and shingles. A lot of companies, including the one I work for, have really limited the amount of coverage they provide for these items. Also many companies no longer let you choose a deductible or offer one below a $1000. Several companies have gone to a percentage of your dwelling coverage for your deductible amount.
Finally I will say that loyalty plays a big part with the company I work for. The longer you are here the bigger a discount you will get. It is also very true that the more insurance you carry with a company, house, cars, life, the more discounts you can earn!
Raising the deductible is such a great idea.
Make sure you are comparing the same items. We switched from one major insurer to another major insurer. Thought we were to save a few hundred dollars only to get an insurance inspector. When he remeasured our house we got an adjustment bill. In the end we only saved $50 from switching.
I agree with all these but would add one: have your agent check your rate every year (or earlier if you choose). Ours went up and we called and our agent reran it and got us a better deal than we were currently getting!
We bundle our homeowners insurance with our cars to save money. Make sure you’re going with a reputable company. I know that we pay a little more but we’ve always been very satisfied with the service we’ve received when we’ve had to use our insurance. Sometimes cheaper doesn’t always mean better. 🙂
Great tips
I switched from one company to another and saved about 30% on the exact same covered. My new policy is to shop our ‘services’ once a year to make sure I am getting the best deal.
You may want to be careful shopping every year for insurance. Loyalty does play a large part in the discounts that you can earn. Also in some states if you have just started coverage with a company and say have an auto accident you may be more likely to get canceled or moved to a higher rate.