Homeowners Insurance – 10 Ways You Can Save Money On Home Insurance

It makes perfect financial sense to look for ways to save money on your bottom line. The problem is, finding those “money-saving secrets” isn’t always an easy task. This is especially true when it comes to your insurance premiums. Insurance rules change from company to company and it is hard to pinpoint ways that you can actually save on your insurance. I’m like you. I want answers. So, I went out in search of money-saving secrets for home insurance.

I asked one of our licensed insurance agents and he listed 10 strategies that may save you money on your homeowners insurance. Keep in mind that these tips vary from company to company. It is always a good idea to ask your insurance carrier before spending money on an improvement. Or, find an insurance company that will lower your insurance for that improvement by getting a quote from an insurance agency that can quote you from 15 or more carriers.

1. Wind Mitigation Credit Some insurance carriers will give you a wind mitigation credit if your house is older than 2002 and has an updated roof, or if it is 2002 or newer. In order to qualify, you must have your home inspected by a certified expert wind mitigation inspector. If your home passes, the inspector will give you a certificate saying your home is more likely to withstand strong wind gusts. And, if you live in the State of Florida, insurance companies are mandated to give you reduced rates for certain wind mitigation features. Some of the features that wind mitigation inspectors look at when inspecting your home are: concrete block construction, the presence of gable end bracing, a hip roof, the presence of a single or double roof straps, the presence of a secondary water resistance barrier, or shutter and opening protection. The Wind Mitigation Credit alone could save you up to 45% on your homeowners insurance.
2. Fire and Burglar Alarm Credit There are insurance carriers that will give you credits for fire and burglar alarms if they are centrally monitored. This means that you have a fire and alarm system that rings at the local fire and/or police stations, or other monitoring facility, when activated. Installing a sprinkler system is also beneficial. These systems are not cheap and it is recommended that you check with your insurance carrier first to find out if they offer the discount, how much of a discount you will get and what products/services they will accept as “safe”. Then, do a price check and make sure the discount outweighs the cost. You can also look into discounts for smoke alarms and dead bolts.
3. A A R P, A A A and Senior Citizen Discounts If you are a member of A A R P, A A A or are considered a senior citizen, you could receive discounts from your insurance company. Most insurance companies already quote a senior citizen discount based on your age, but it is always good to call your insurance company to see if they offer it and make sure you are receiving it if they do. Make sure you let the person quoting your insurance know that you are an A A R P or A A A member. If you joined after your policy started, call and have them add on the discount.
4. Accredited Builder Discounts If your home was built by an accredited builder, you could get a discount from your insurance company. An accredited builder is a company that your insurance company deems reputable. Each insurance company has their own list. In most cases, your home has to be newly built in order to qualify. Not all insurance companies offer this discount, so check with yours to find out. If you are looking into building a new home, calling your insurance company and obtaining their list of accredited builders could save you money in the long run.
5. Good Credit More and more insurance companies are giving discounts based on your credit. Maintaining a good credit score will increase your chance of saving money on your homeowners insurance. It is a good idea to check your credit with the different credit reporting agencies a few times a year. Make sure it is accurate and if it is not, follow the steps of disputing claims against your credit. As a general rule of thumb, keep your credit balances low, pay your bills on time and try not to obtain more credit than you actually need.
6. Multiple Policies and Loyal Customer Discount If you purchase your home insurance in conjunction with another policy like flood or auto, you could receive a multiple policies discount. You can save 5% – 15% for having two or more policies with the same insurance carrier. Be sure to price-check first to be positive that a multiple policy is cheaper than individual policies among other carriers. You may even get a discount just for being a loyal customer that has maintained insurance with a company over a period of time. Check with your insurance company to see if these discounts are available and how you can be eligible. If you have maintained insurance with one carrier for several years and are eligible for a loyal customer discount, find out if they offer a multiple policy discount on top of it.
7. Value of House vs Value of Whole Property Some people make the mistake of insuring their entire property, rather than just the portion that could be damaged – the actual structure(s). In the case of a hurricane or tornado, the ground will not be damaged by wind or flood. Make sure that you are insuring your property based on the cost of rebuilding your home and replacing valuables.
8. Increase Deductible Most insurance companies recommend a deductible of $500. But, if you increase your deductible to $1000, you could save up to 25% on your insurance premiums. The deductible is the amount of money you have to pay before the insurance company has to pay on a claim. Remember, different coverages may call for different deductibles. For example, hurricane prone areas may have a separate deductible for wind damage, earthquake prone areas may have a separate deductible for your earthquake policy and hail storm prone areas may have a separate deductible for hail damage. Look at all the possibilities and if you choose to increase your deductible, make sure to keep at least that amount in a savings account in case of emergency.
9. Review Policy Limits We always want all of our possessions covered. But, sometimes values depreciate and we no longer need to pay a premium on an item that was worth $5000 three years ago that is only worth $3000 today. Check the actual value of your treasured possessions and see if you can reduce or even eliminate the floater. A floater is extra insurance that covers valuables not normally covered by standard homeowners insurance such as, high-end computers and other technological devices, expensive jewelry or valuable art work.
10. Shop Around As any good consumer would do to save money, Shop Around. The easiest way to shop around for the cheapest homeowners insurance is to find an independent insurance agency that represents a high number of insurance companies. If your insurance agent can quote you from a base of 15 or more insurance companies, you are more likely to get a better deal if you checked with a small agency that can only quote 5. Home insurance companies often target certain geographical areas and will offer a cheaper rate to those areas. The coverages all are all the same. No one insurance company offers a different coverage than the other. The only difference is service and price. Having a large amount of insurance companies to quote from ensures that you are getting the best possible price.

A Beginner’s Guide to Insurance

Having the right kind of insurance is central to sound financial planning. Some of us may have some form of insurance but very few really understand what it is or why one must have it. For most Indians insurance is a form of investment or a superb tax saving avenue. Ask an average person about his/her investments and they will proudly mention an insurance product as part of their core investments. Of the approximately 5% of Indians that are insured the proportion of those adequately insured is much lower. Very few of the insured view insurance as purely that. There is perhaps no other financial product that has witnessed such rampant mis-selling at the hands of agents who are over enthusiastic in selling products linking insurance to investment earning them fat commissions.

What is Insurance?

Insurance is a way of spreading out significant financial risk of a person or business entity to a large group of individuals or business entities in the occurrence of an unfortunate event that is predefined. The cost of being insured is the monthly or annual compensation paid to the insurance company. In the purest form of insurance if the predefined event does not occur until the period specified the money paid as compensation is not retrieved. Insurance is effectively a means of spreading risk among a pool of people who are insured and lighten their financial burden in the event of a shock.

Insured and Insurer

When you seek protection against financial risk and make a contract with an insurance provider you become the insured and the insurance company becomes your insurer.

Sum assured

In Life Insurance this is the amount of money the insurer promises to pay when the insured dies before the predefined time. This does not include bonuses added in case of non-term insurance. In non-life insurance this guaranteed amount may be called as Insurance Cover.

Premium

For the protection against financial risk an insurer provides, the insured must pay compensation. This is known as premium. They may be paid annually, quarterly, monthly or as decided in the contract. Total amount of premiums paid is several times lesser than the insurance cover or it wouldn’t make much sense to seek insurance at all. Factors that determine premium are the cover, number of years for which insurance is sought, age of the insured (individual, vehicle, etc), to name a few.

Nominee

The beneficiary who is specified by the insured to receive the sum assured and other benefits, if any is the nominee. In case of life insurance it must be another person apart from the insured.

Policy Term

The number of years you want protection for is the term of policy. Term is decided by the insured at the time of purchasing the insurance policy.

Rider

Certain insurance policies may offer additional features as add-ons apart from the actual cover. These can be availed by paying extra premiums. If those features were to be bought separately they would be more expensive. For instance you could add on a personal accident rider with your life insurance.

Surrender Value and Paid-up Value

If you want to exit a policy before its term ends you can discontinue it and take back your money. The amount the insurer will pay you in this instance is called the surrender value. The policy ceases to exist. Instead if you just stop paying the premiums mid way but do not withdraw money the amount is called as paid-up. At the term’s end the insurer pays you in proportion of the paid-up value.

Now that you know the terms this is how insurance works in plain words. An insurance company pools premiums from a large group of people who want to insure against a certain kind of loss. With the help of its actuaries the company comes up with statistical analysis of the probability of actual loss happening in a certain number of people and fixes premiums taking into account other factors as mentioned earlier. It works on the fact that not all insured will suffer loss at the same time and many may not suffer the loss at all within the time of contract.

Types of Insurance

Potentially any risk that can be quantified in terms of money can be insured. To protect loved ones from loss of income due to immature death one can have a life insurance policy. To protect yourself and your family against unforeseen medical expenses you can opt for a Mediclaim policy. To protect your vehicle against robbery or damage in accidents you can have a motor insurance policy. To protect your home against theft, damage due to fire, flood and other perils you can choose a home insurance.

Most popular insurance forms in India are life insurance, health insurance and motor insurance. Apart from these there are other forms as well which are discussed in brief in the following paragraphs. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).

Life Insurance

This form of insurance provides cover against financial risk in the event of premature death of the insured. There are 24 life insurance companies playing in this arena of which Life Insurance Corporation of India is a public sector company. There are several forms of life insurance policies the simplest form of which is term plan. The other complex policies are endowment plan, whole life plan, money back plan, ULIPs and annuities.

General Insurance

All other insurance policies besides Life Insurance fall under General Insurance. There are 24 general insurance companies in India of which 4 namely National Insurance Company Ltd, New India Assurance Company Ltd, Oriental Insurance Company Ltd and United India Insurance Company Ltd are in the public sector domain.

The biggest pie of non-life insurance in terms of premiums underwritten is shared by motor insurance followed by engineering insurance and health insurance. Other forms of insurance offered by companies in India are home insurance, travel insurance, personal accident insurance, and business insurance.

Buying Insurance

There are an umpteen number of policies to choose from. Because we cannot foresee our future and stop unpleasant things from happening, having an insurance cover is a necessity. But you need to choose carefully. Don’t simply go with what the agent tells you. Read policy documents to know what is covered, what features are offered and what events are excluded from being insured.

1. Know your Needs

Determine what asset or incident must be protected against loss/damage. Is it you life, health, vehicle, home? Next determine what kinds of damage or danger exactly would the assets be most probably be exposed to. This will tell you what features you should be looking for in a policy. Of course there will be losses which cannot be foreseen and the cost of dealing with them can be very high. For instance nobody can predict that they’ll never suffer from critical illnesses no matter if they’re perfectly healthy at present.

The biggest mistake while it comes to buying insurance, particularly life insurance is to view it as an investment. Clubbing insurance and investment in a single product is a poor idea. You lose out on both fronts because for the premiums you’re paying more cover could’ve been got in a term plan and if the premiums were invested in better instruments your returns could’ve been several times more.

Be wary of agents who want to talk you into buying unnecessary policies like child life insurance, credit card insurance, unemployment insurance and so on. Instead of buying separate insurance for specific assets or incidents look for policies that cover a host of possible events under the same cover. Whenever possible choose riders that make sense instead of buying them separately. Unless there is a fair chance of an event happening you do not need insurance for it. For instance unless you are very prone to accidents and disability due to your nature of work or other reasons you do not need an Accident Insurance policy. A good Life Insurance policy with accidental death rider or waiver of premium rider or a disability income rider will do the job.

2. Understand Product Features and Charges

The worst way of choosing an insurance product or insurer is to blindly follow the recommendation of an agent or a friend. The good way to do it is to shop around for products that suit your need and filter out the ones offering lower premiums for similar terms like age, amount of cover, etc. All details you need about the product features and charges will be provided on the company’s website. Many insurance policies can now be bought online. Buying online is smarter because premiums are lower due to elimination of agent fees. If buying offline in case of life insurance, tell the agent that you’re interested only in term insurance.

Before you sign on the contract make sure you have understood what items are covered and what items are exempted from the cover. It would be so devastating to learn in the event of damage or loss that the item you hoped to cover with the insurance was actually excluded. So many people rush to their insurers after being treated for diseases only to realize that the particular disease was excluded. Understand details like when the cover begins and ends and how claims can be filed and losses be reported.

Don’t choose an insurance company because your neighbourhood friend is their agent and never let them coax you into buying from them. Insurance premiums run for years and it means a sizeable amount of money. Apart from the premiums charged look for the service provided. When you are faced with a peril you want the claims collection processed to be complicated with non-cooperating staff in the insurance company’s office. Seek answers from people who have had previous experience with the company for questions like how customer friendly and responsive the company is when it comes to handling claims.

3. Evaluate and Upgrade in Time

As you walk from one life stage to another or when the asset insured changes your policies must be reviewed. Perhaps your cover will need to be increased (or decreased) or you’ll need to top it up with a rider. Some instances when you need to review your cover are when you getting married, when you have children, when your income increases your decreases substantially, when you’re buying a house/car and when you’re responsible for your ageing parents.

Landlord Insurance – What Is Emergency Assistance Insurance?

When it comes to an emergency and you need a window or a boiler fixed, landlords can be out of pocket before they know it. The good news is that most companies now have a type of insurance called emergency assistance cover.

This is great for the landlord, but not so great for the company that’s paying.

Is my central heating parts covered?

If you take this cover, all your pipe work and boiler system will be covered with the policy. It comes at a price but well worth the money you pay for it. Your central heating system is one of the most important and most expensive part of the property so why not protect it?

You can pay for this every month, which makes the payments better for you.

What about my windows and glass?

If you come across a smash window or a broken side window, you can claim your insurance. If it’s one o’clock in the morning and your alarm wakes you up because of an attempted break-in, the insurance companies will run to help you.

Glass is a very expensive to replace and some glass installers could rip you off if you need an emergency repair.

What if I lose my keys, what do I do?

If you or your tenant loses the keys to the front or back door, a locksmith is needed and this could be at any time, day or night. So what do you do? Well, you can pay for a locksmith out of your own pocket or you can phone the insurance company if you have emergency assistance insurance.

When can I use the insurance?

The very good advantage to landlords is the fact that they can use this policy any time they need it. It’s called emergency assistance cover and for a good reason, it saves landlords a lot of bother getting out of bed and dealing with the situation.

What’s the cost of this cover?

Nothing compared what it provides for landlords, just try and pay for emergency callouts yourself, you’ll shocked at the charges. On some instances, you could be charged £400 for one lock and a set of keys to be replaced.

Other tradesmen charge around £45 per callout and up to £30 per hour for labor charges. Plumbers and joiners are very expensive to pay during out of hours if you do not have insurance to cover it.

Insurance is always worth it in the end when it comes to landlords and let properties.