There really are no secrets to saving money on home insurance. The trick is to include evaluating your insurance needs as a part of your yearly financial review. Most individuals don't do this and are losing out on potential savings. Here are some of the best ways to save money on home insurance:
Shop around for best coverage and price – Shopping around is a great way to save money on home insurance. A great tip to save even more is to call the insurance agent directly and let them know you are comparison shopping. Make sure to call them back with your best quote as they are likely to negotiate their price. Before signing an insurance policy, use www.ambest.com to check the financial stability of the insurance company.
Insure Your Home and Not Land – Many people are paying more for insurance because they are including the value of the land the home sits on. Using an online home rebuilding calculator to estimate what it would cost to rebuild your home in today's dollars can help in determining the amount of insurance you need. I recommend you take out a replacement value insurance policy on your home. “Replacement Value” coverage is more expensive but covers you for the value to replace your home and insured contents at today's prices.
Review Insurance Policies and Coverage Yearly – That $3000 Plasma TV may only cost $1500 to replace today. Have you sold or donated valuable items such as jewelry or electronics? Update your valuables inventory list and reduce coverage to save a few bucks.
Remove Auto Coverage for College Students – When your child moves away for college don't forget to remove them from your auto policy and check to make sure your homeowners policy covers their belongings while attending college. When they return for the summer don't forget to add them back!
Make sure your home is safe – Install a monitored alarm system, deadbolt locks, buy new or replace old fire extinguishers, and clear brush from around your home in fire prone areas.
Stay with the same insurer for loyalty discount – Most insurance companies will give you a discount for loyalty, those who have maintained active policies for several years.
A Good Credit Score – Research firm Conning & Co. recently conducted a survey and found that many home insurers use a person's credit rating in determining whether to write a policy or in setting the premium.
Combine Policies for up to 20% savings – By combining auto, home, RV, life, umbrella, and business policies with the same company you can save a substantial amount of money. This is a powerful negotiating strategy so shop around before signing a policy.
Ask your Insurance Agent about Discounts – loyalty, multi-policy,monitored security alarm, newer construction, masonry, sprinkler system, detached garage, 55 or older and retired.
Increase your deductible – By increasing your deductible to $1000 you can save approximately 20%-25% on insurance premiums.
So what do you do with the money you save on Home Insurance?
- Increase your 401k deduction next month for the amount of your savings
- Open up a Roth IRA for a child
- Pay off debt
- Pay it forward with a micro-loan. I recommend KIVA as I have been using them for years.
What would you do with the money you could save on home insurance?