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How To Know If You’re Overpaying for Home Insurance

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Evan White
Evan Whitehttps://dellacooks.com
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Are you in the market for a new home or curious to see if you’re overpaying for your current home insurance coverage? Certain elements can raise or lower your rates like any other insurance, but what are the secrets to the price quote equation?

Let’s find out what home elements help or harm your pockets. The good news is that you can take steps to lower your home insurance costs. Good money habits, home maintenance, and shopping around for home insurance quotes can affect what you pay for your policy.

Types of Home Insurance Coverage

Standard home insurance typically includes four parts:

  • Dwelling coverage covers damages to the physical structure of your house. You need to have enough coverage to rebuild your home in case of fire or other damage that leaves your home destroyed.
  • Replacement coverage may be more expensive than you would think. Therefore, it’s essential to review this part of your policy at least every couple of years to be sure you have adequate coverage.
  • Loss of use coverage is a smaller amount of coverage that you can access to pay for an apartment or motel if you can’t live in your home after a fire or other disaster. Most policies have a loss of use policy of between 20% and 30% of the home value.
  • Personal property coverage covers possessions and furnishings inside the home. You should keep an inventory of your home furnishings.

Coverage for other structures includes policy coverage for fences, garages, sheds, and similar structures.

Ways to Save on Your Insurance

There are definite strategies to help you save on your home insurance. First, you should shop around for your home insurance. Get quotes from at least three insurers, and get quotes every few years to make sure you are getting the best value.

You may find you already have access to discounts through organizations. For example, your employer, credit union, or other organizations may provide discounts to their members.

Look for an insurance company with a strong rating. You may want to check with your state insurance commissioner’s office about companies to avoid.

Review Your Policy With Your Agent Every Year

It’s vital that you understand what your insurance policy covers. Unfortunately, many policy documents are confusing and hard to read. Instead, review the declarations page with your insurer, and look at the exclusions to find out what isn’t covered.

Keeping your home and auto insurance policies at the same company can save you as much as 15% in some cases. Keeping all your insurance with one company is usually an economic strategy and makes more sense than buying coverages from several companies.

Many insurers offer loyalty discounts. For example, keeping your policy with the same insurer for more than three years can earn an additional discount.

Discounts also apply to new construction. If you have replaced your roof, added a security system or alarm system, or made energy-saving upgrades, you may be able to get additional discounts.

How to Know if You're Overpaying for Home Insurance

Hike your deductible

In general, the higher your deductible, the lower your insurance premiums. For example, raising your deductible to $1,000 can reduce your premiums significantly. However, as you consider the cost of your premium, consider the cost of repairs or issues that might have you filing a claim.

Avoiding small claims can also help keep your premiums from increasing. You shouldn’t have a deductible that’s higher than you can afford out of pocket. If you have an emergency fund that could withstand the hit, talk with your agent to determine how much your premiums could change if you increase your deductible.

Eliminate Safety Hazards

Many home insurance companies will charge extra for safety hazards like a pool or trampoline. These can each be significant liabilities. Eliminating them can keep your home insurance reasonable.

Discuss the impact of getting rid of possible hazards or erecting a fence around them. Consider improving your home security by installing smoke detectors, carbon monoxide detectors, deadbolt locks, and other security measures.

In some areas, you may get discounts by installing hurricane shutters and other protective devices. Spending some money now can earn discounts in the future and help you feel more secure.

Maintain Your Home

Routine maintenance can be easy to postpone. For example, cleaning out gutters and keeping your home in good shape is time consuming. However, home maintenance is essential to keep small things from becoming big problems.

Be alert to minor issues so you can resolve them before they get out of control. Checking for leaks can prevent water damage. Water causes rot and mold and can quietly do a lot of damage before realizing you have a problem.

Most lenders require homeowners in flood zones to carry flood insurance. However, the risk of flooding is increasing, so it’s a good idea for every home to have coverage even if you are not officially in a flood zone.

Flood insurance in low-risk areas is much less expensive than policies in high-risk areas. If you need flood insurance, you’ll need to purchase it through the National Flood Insurance Program or a private insurer.

You can help decrease your flood insurance premium if you live in a high-risk flood area by elevating your home and utilities.

Other Considerations

Having a good credit history can help you get a better insurance rate. A good credit rating saves you money on interest. Paying your premium in full at the beginning of the billing cycle will save you the fees insurance companies charge for making installment payments.

It’s also a good idea to have a pest control company inspect your home periodically. Besides being pests, insects can do real damage to your home. Termites can ruin your property and, if not treated, can cause irreparable damage.

A few other considerations can factor into the rate you pay for home insurance, including how far you live from the nearest fire station, fire hydrant, and the age of your plumbing, heating, and electrical systems.

Your record of filing claims can also factor into your rates. If you have a history of filing home insurance claims, you will probably pay higher rates. Companies can penalize you over a period of time for being at high-risk or making a lot of claims.

Higher premiums and even cancellation of your policy can be the result. If this happens, it can be challenging to find another insurance company. However, if you have a small amount of damage and can afford to cover it out of pocket, it’s probably better to just pay for it rather than file a claim.

Alexandra Arcand

Alexandra Arcand writes and researches for the insurance comparison site, USInsuranceAgents.com. She is a policy expert who enjoys sharing ways her readers can save on their home insurance costs.

Last Updated on 8 months by Evan White

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