Homeowners insurance is a necessity for those who own a home. It’s also required by mortgage companies. Here are some practical ways to save money on homeowners insurance.
We’ve written in the past about how to save money on health insurance, life insurance, and car insurance.
Today, I’m going to round things out with an article about saving money on your homeowner’s insurance. If you have a mortgage, this is likely a mandatory expense, as your lender will require it.
If you own your home outright, it’s simply a smart one.Just because you have to have homeowner’s insurance, though, doesn’t mean that you are stuck paying an arm and a leg for it. What follows is a list of eight tips for reducing your premiums. Combine them all, and you could be save a ton of money while protecting your home from damage or loss.
1. Focus on your rebuilding costs
When you think of homeowner’s insurance, what’s the first thing that comes to mind? For me, it’s the thought of my house burning down, and my family losing everything that we have. My second thought is of being burglarized (which actually happened in 2009), and all of my valuables taken. Those are my whys.
Now, how do you determine how much insurance you actually need? Is it dependent on your home’s current value, if you were to sell today? The added value of everything inside the walls?
While you absolutely need to insure your home and its contents against destruction, there’s usually no need to insure the land that it’s built on. Thus, it’s important to think of your actual rebuilding costs (as well as the cost to replace your stuff) when buying a policy.
This may be wildly different than the current market value of your home, depending on a number of circumstances.
However, it’s important to do a bit of research before settling on a coverage amount. If you don’t, you might end up over-insuring and paying too much each month.2. Increase your deductible
In this way, homeowner’s insurance isn’t any different than other types of insurance. If you’re willing to bear a greater portion of the risk, you can save a significant amount of money.
To save money this way, simply call your agent and ask them to increase your deductible. In turn, your monthly payments should go down, possibly significantly.
It’s important to note that homeowner’s policies are managed a bit differently than car insurance or personal property insurance. Those deductibles are typically much lower, and bumping yours from $250 to $500 or $1,000 might not be a budget breaker.
Resource: Does Raising Your Car Insurance Deductible Also Save You Money?
However, many homeowner’s policies are percentage-based. This means that your deductible is actually contingent on the amount of coverage you hold (the value of your home and its contents).
My own insurance works this way, and the deductible is 1% of the policy coverage ($190,000). This means that every time I make a claim, I’m stuck paying the first $1,900. Were I to bump this deductible to 1.5% or 2%, in order to save on premiums, we would be talking about an increase of either $950 or $1,900. And that would probably sting a bit.
Depending on your policy, raising your deductible can be a great way to save money, month over month. Before you do this, though, just be sure that your emergency fund…
The post How to Save Money on Homeowners Insurance appeared first on FeedBox.