Home Insurance: Finding the Right Policy for You

When you buy a home, the lender (mortgage company) is almost always going to ask that you have and keep homeowners insurance on your home for the life of your loan. There are many ways you can reduce the amount you need to spend on your insurance -- here are just a few ideas for you.

Comparison Shop

The easiest way to reduce your home insurance cost is to shop around. As with any type of insurance, whether it be car insurance, home insurance, or health insurance, you will receive different rates from different companies. Moreover, with the internet now at your fingertips, it has become easier than ever to get quotes from several companies without leaving your home or even making a phone call.

Multi-Policy Discounts

Many companies offer significant discounts if you purchase more than one type of insurance from that same company (e.g., home insurance + auto insurance + boat insurance). The savings can be significant - as high as 40% on each policy – so it is wise to shop around to see how large the multi-policy discounts can be if you get them all from the same company.

Review your Home Insurance Periodically

Harper Insurance recommends that you review your home insurance coverages yearly to make sure things are current and up-to-date. Things change. You should also make sure that you are not paying for insurance that you no longer need, and only a close examination of your policy will uncover those areas. For example, suppose at one time you owned and insured a special piece of art in your home. But upon a closer review of your policy you remember that you sold that piece of art. Since this piece is no longer in your possession you can take it off your policy – which will reduce your annual premium. This is just one example of the many things that you insure in your home that might change during the year.

Decide if Higher Deductibles are Right For You

Most types of insurance have deductibles, and deductibles have a major effect on the overall cost of your insurance. The deductible is the amount that you pay before the rest of the damage is paid by your insurance company. When you choose a lower deductible (i.e., you take on less risk), the more expensive your insurance will be. If you can afford a higher deductible (i.e., you take on more risk, as you are paying more), the cost of your insurance will go down. One option you have is to raise your deductibles to lower the cost of your insurance. Talk to your insurance agent to see if increasing your deductibles is right for you.

Select Your Own Level of Personal Property ("Contents") Coverage.

Most companies make personal property coverage on a home insurance policy a fixed percent (e.g., 75%, 70%) of the dwelling coverage on the policy, but that can result in a very large number. For example, if you home is insured for $300,000, and the personal property coverage within the policy is 70% of the dwelling coverage, you will be paying for $300,000 x 70% = $210,000 of personal property (“contents”) coverage even if you only have $50,000 of personal property. Find a company that will allow you to insure $50,000 of personal property. Don’t pay for more insurance than you need.

Other Discounts

You never know how much simple additions to a home’s safety can decrease your insurance costs. Small things like adding dead bolt locks on your doors, or adding smoke detectors, can greatly affect the cost of your home insurance. Security features are a big plus when it comes to lowering the cost of your home insurance. Double locks on doors, alarms, and gated communities will also lower your insurance rates.