Homeowner's Insurance Savings

Homeowners insurance is one of those take-it-for-granted expenses. Lenders require it, and most homeowners pay it every year without question. Few of us realize, however, that homeowners insurance is a highly competitive business, or that quotes can vary by hundreds of dollars. Discounts, deductibles, group rates, and other money-saving measures can bring your total costs down substantially. Research definitely pays off! Here's what to do.

Shop Around - and get the best rate.

Take Time to Shop Around.

Make a few phone calls to several insurance agents and companies to explore price ranges and services. Ask them what you should do to lower your costs. Remember, purchasing the cheapest policy may save you money but won't guarantee the best service. Make sure you get referrals from friends, or call the state insurance department for information on specific companies. Check their financial ratings.

Raise Your Deductible.

Deductibles are the amount you contribute toward a loss before your insurance company starts to pay according to the terms of our policy. You probably have a $250 deductible. Want to save money on your annual premium? Depending on your insurance company, simply raising your deductible to $500 could save up to 12 percent; increasing to $1,000 could save 24 percent, etc.

Consider One-Stop Shopping:

Some companies offer a 5 to 15 percent discount to customers who buy more than one policy - home, auto and liability umbrella, for example. Ask your agent.

Seek Senior Citizen Savings.

If you're in the golden years, specifically 55 or older and retired, you may qualify for a discount of up to 10 percent. Insurance companies consider retired people at a lower risk.

Explore Group Coverage.

Many employers negotiate competitive rates for employee group packages. Check with your employer. Business associations or alumni associations sometimes have similar deals.

Get Credit for Being a Good Customer.

Some companies try to encourage customers to stay with them by reducing premiums by 5 percent if you keep your policy for a minimum of three to five years, or 10 percent for 6 years.

Try Private Insurance Before Government Insurance.

If you're a high risk because you live in an area susceptible to fires, crime, floods, etc., don't run to a government plan before checking out private insurers. You may qualify for a private insurance policy by taking steps to reduce your risk.

Check location, features and construction.

Home buyers can take inventory to see if they qualify for discounts. Newer homes are cheaper to insure than older ones because their structure and systems are less likely to break down. Ask if the company offers a discount on newer homes, typically 8-15 percent. Construction makes a different, too, with brick standing up better to wind in the east, and wood frame homes getting higher grades for earthquake resistance in the west. The discount: another 5-15 percent. Common sense dictates avoiding high risk areas such as flood plains. Proximity to firefighters also affects your premium.

Take Inventory - Know WHAT you're insuring.

Don't Bother Insuring the Land.

Your house is accident-prone, but your land is more or less indestructible. Don't include the land value in your policy.

Make Sure You're Covered.

Be sure to ask your agent or insurance company rep about coverage for unusual items - computers or high tech stereos, for example. If you run a home-based business, your equipment has only $2,500 of coverage under the standard homeowner policy. You may need extra coverage for business equipment as well as business liability insurance.

Make an Annual Review.

Take inventory of any major purchases or renovations that need to be covered. Conversely, drop unnecessary coverage for items you dump, sell or give away.

Lower Your Risks - and your premiums

STOP smoking! - You may qualify for lower premiums for a nonsmoking household. Why? Smoking causes more than 23,000 residential fires per year.

Improve Home Security

The more sophisticated your security system, the more you save on premiums. Start with at least 5 percent for smoke detectors, burglar alarms, or dead-bolt locks. Some insurance companies will let you take another 15 to 20 percent for a sprinkler system or a fire and burglar alarm that notifies the authorities. But don't base your decision to buy one solely on potential home insurance savings - these systems can be expensive.