Money-Saving Tip #1: Review the replacement value of your home
Many agents just use the purchase price as the insurable value. Don’t confuse market value, appraised value, or taxable value with replacement value. Insurance is just concerned with replacement value of your home (structure only). These other valuations are not appropriate because they include the land, location, neighborhood, and other non-insurable items. In most cases the replacement value (insurable value) is less than the purchase price (market value).
Money-Saving Tip #2: Increase your deductible
The premium savings to go from a $250 deductible to a $1,000 deductible could be as high as 15%. Since the average homeowner has a claim once every seven years, multiply your annual savings by seven to realize your total potential savings. The more valuable your home, the higher your deductible should be. Consumer Reports and other periodicals recommend a minimum deductible of $1,000.
Money-Saving Tip #3: Check your policy before scheduling personal property
Personal property items like jewelry, guns, furs, cameras, golf clubs, etc., have special limitations in your homeowner policy of $500 to $5,000 for theft. If you have valuable items that exceed the limitations, you may want to schedule them. Remember, deductibles can reduce the additional premium of some scheduled items by up to 40%.
Money-Saving Tip #4: Be aware of “inflation guard” endorsements
The insurance company increases your home’s value by 2-5% per year when the actual inflation factor may be much less. While the market value of your home may be increasing by 2-5% per year, the replacement cost value may not. After some years of this practice, your value and premiums will get out of control.
Money-Saving Tip #5: Ask about special discounts
You may be eligible for special discounts such as new home, claim-free, auto-home package, alarm system, etc. Alarm systems alone can reduce your homeowner premium by 5%. Ask about a three-year policy, as it locks in your coverage and premium for three years.
Money-Saving Tip #6: Think twice before reporting any small claim
The claim-free discount can be 20% per year. If you make a $750 claim, you will only collect $250 after your $500 deductible. The loss of the claim-free discount could cost you $100 per year in additional premiums over the next 3-6 years. In addition, if you have two or more claims in a three-year period, you risk cancellation or non-renewal by many insurance companies.
Money-Saving Tip #7: Do a home inventory of all your personal property
It is impossible to remember all your possessions after a tragic loss such as a fire. Prepare a written (preferred method) or video tape inventory of all your possessions, including items in closets, attics, basements, and garages. Update it periodically and keep it in a safe place away from your home.
Money-Saving Tip #8: Speak with an agent
Independent agents represent several insurance companies and can find the best fit for you and your family. We recommend that you have the same agent coordinate all your policies (homeowners, auto, boat, rental properties, umbrella, etc.). An independent agent works for you, rather than the insurance company. Packaging all your policies gives you the best discounts. This is very important when it comes to a fast and fair claim settlement.