This blog post was written by Phil Blair the owner and founder of Century 21 Everest. Phil has been involved in the real estate business since 1987, selling and managing all types of real estate including commercial buildings, land, homeowner’s associations, and residential properties. Medicus Wealth Planning has no financial relationship with Phil or Century 21 Everest.
Homeowner’s insurance isn’t a cost many people tend to think about much since it’s bundled into their monthly mortgage payment with principal, interest, and property taxes. However, how much you pay for your homeowner's insurance may differ by hundreds of dollars in comparison to someone who has a similar home to you in the same neighborhood. By double checking your coverages, amounts, and making some changes to your home you can reduce your homeowner’s insurance premium and put those extra dollars to better use.
1. Outfit your home with energy-efficient materials.
Not only can this reduce your insurance premium, but you also stand a chance to benefit from state and federal rebates. Usually, your insurance premiums can be reduced by up to 11% just by incorporating green measures. Energy efficient materials will also reduce your utility bills. According to InsWeb, you stand to save up to 30% on your monthly utility bills.
2. Upgrade your home’s roofing.
With time, your roof is going to take a battering from the elements. Wind, snow, hail, lightning, and nature in general can wreak havoc on your home. To make your home less susceptible to weather damage, install weather-resistant roofing and replace shingles. By doing this, your insurance rates may lower as insurers may view you as less of a risk.
3. Update your home’s security system.
Installing a better security system for your home can also earn you insurance discounts. Normally, installing smoke detectors, burglar alarms and dead-bolt locks can give you discounts of more than 5%. What’s more, you can even get discounts of more than 20% if you install an advanced sprinkler, anti-burglar and anti-fire system that’s connected to a monitoring service. Granted, installing such systems can be awfully expensive and it isn’t a given that you’ll even get a discount after all. So, before putting up such systems, get advice from your insurance agent.
4. Maintain a healthy credit history.
This is as a no-brainer. The better your credit history, the lower your insurance premiums will be and vice versa. To safeguard your credit rating, there are a number of things you can do. Minimize your debts, maintain a low credit balance, and pay your bills promptly.
5. Insure the structure only.
Many homeowners policy automatically come with an ‘Other Structures” coverage. This covers detached property from your home such as a detached garage, shed, or workshop. If you don’t have detached structures on your property inquire with your insurance company about removing this coverage.
6. Add an umbrella policy.
An umbrella policy provides an additional liability coverage above the limits of your standard homeowner's insurance policy. While it may seem counterintuitive, you may actually earn discounts by adding an umbrella policy. The reason for this is retention. According to data, clients with extra insurance policies with the same insurance company are more likely to remain a client of theirs.
7. Avoid filing unnecessary claims.
The more claims you file, the more of a financial risk you become. So, pay for small repairs out of pocket to avoid having your rates raised. Maintenance problems, renovation projects, and plumbing leaks are examples of minor repairs you could manage paying for. If you manage to go a couple of years without a claim, then it is possible to get a discount.
8. Avoid changing insurance companies.
Many insurance companies will offer their long-term clients discounts. Generally, if you stick to one insurance company for three to five years, you can get a discount of 5% on your next insurance policy. And the longer you continue to stay, the more favorable the discounts will be. But it’s important, from time to time, to compare the cost of your current insurance policy with those of other companies. Also, check the health of your rating frequently and get any errors rectified immediately.
9. Increase your deductible.
As a rule of thumb, the higher the deductible, the lower the premiums you’ll pay and vice versa. Nowadays, many insurers recommend that clients pay a minimum of $500. However, it may be worth raising your deductible to lower your premiums.
10. Reassess your policy limits and the value of your assets annually.
As you make improvements to your home and the market value rises adjust your limits to ensure you always have the proper coverage amount. A quick annual review with your financial planner or insurance agent will help you accomplish this.
If you have specific questions about your homeowner’s policy reach out to your fee-only financial planner and your insurance agent. They will do their best to ensure you understand all the coverages of your policy and have the correct limits to cover you in the case of a loss.