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What is a Homeowners Insurance?
Homeowners Insurance is an insurance policy that you buy from an insurance provider which helps protect your home and family from unexpected events or disasters. It generally provides coverage to both your interior and exterior parts of your home. Though it is not mandatory to have Homeowners insurance by law, it is wise to invest in an insurance to protect your home and family and have peace of mind from unexpected events and disasters. If you have a mortgage for your home, then Lenders may require you to have Homeowners Insurance or Hazard Insurance as a mandatory element before closing to provide financial protection against losses or unexpected events.
Coverage
Homeowners insurance has two parts, part one gives the property coverage and part two gives the liability coverage. There are various types of coverage and the most popular one is the HO3 coverage, which covers damages to your home except the ones the policy excludes such as flood or earthquake Insurance which has to be bought separately according to the need.
Ways to Lower your Homeowners Insurance
Shopping Around Policies
You may have to shop around to compare the premiums and coverage included in several policies and policy providers once in 2-3 years to reduce your premium and optimize your coverage.
Buying Insurance for the replacement value not for the market value
The land area under your home doesn't have any threat to theft, natural disasters like wind storms or any other perils covered by your homeowners insurance. So, while calculating the coverage the amount you paid for the home, it should not be confused with the cost of rebuilding your home. By excluding the land value, you can reduce your coverage amount which may in turn reduce your insurance premium.
Raising deductibles
Deductibles are the amount that has to be paid out of pocket for a claim toward a loss before the insurance coverage kicks in. The higher the deductible, the insurance premium gets lowered. The deductible limit, coverage limit and other options depend on a number of factors such as the type of insurance policy provider, location, coverage amount, type of insurance etc. Some natural disasters like earthquake, flood, hail may not be covered under regular homeowners insurance coverage and they have their own deductibles.
Combining Auto and Home Policies
Some insurance policy providers may provide discounts when buying two or more policies under them. It may be cheaper when compared to the price of different policies bought under different companies.
Going through the limits and possessions
The cost of the insurance policy is usually higher if the coverage limits are higher. The values of the possessions may not be the same as when you bought the insurance. You may have to consider reducing or canceling the Floaters ( Floaters are a type of insurance policy which covers expensive items such as jewellery, artwork, paintings etc that are not usually covered by the standard homeowners insurance policy ) which may not have the same value as it was when the policy was originally taken.
Exclude Minor Claims
You may consider taking care of small claims by yourself out of pocket. The more claims made, the insurance provider may consider you a high threat consumer and may in turn increase your insurance premium accordingly or in some cases they may even cancel your policy if they feel there are too much claims racked up from a single policy holder.
Research lesser known ways for discounts
You may call your insurance provider and find out about lesser known discounts which you may be applicable for.
There are Student and Military discounts available.
Inform the insurer if you have made any new improvements in your home such as new roof for which the insurer may provide a discount.
Some insurance companies provide discount if you add a Home Security System as they consider it as an effort made to reduce burglary by the consumer.
Some insurance companies provide discounts if you have long term policies rather than 3 or 6 month term policies.
Some companies also provide discounts if the policy is paid in full as one lump sum such as once a year.
Choosing paper-less billing.
Some insurance companies provide discount if your home is located near a fire hydrant or fire station.
Some insurance companies provide discounts if their consumers are from certain professions such as Fire fighter, Teacher etc
Installing fire safety system such as sprinklers may reduce your insurance premium.
Remove any detached garage or shed that is not of use as the insurance premium calculation not only includes your home but also other structures in the property.
Upgrading your home
Installing proper smoke alarms, storm proof windows, storm shutters, water shut off device ( a device that shuts of water from the main pipe if water is sensed to flow for a longer period of time ). By taking extra measures to safeguard your home, your home may not only be better protected from disasters, it may also reduce your insurance premium. By upgrading air conditioning and heating systems, it may reduce both your electricity bill and insurance premium.
Maintain good credit history
Many insurance providers decide the insurance premium based on the credit history, so it is important to maintain a good credit record. Its important to check your credit history on a regular basis to clear out any errors.
High risk stuff
Some insurance providers think having a Trampoline, Swimming Pool or Play structures etc poses a high risk for medical injury claims. Limiting or removing high risk items may reduce your insurance premium. Some improvements may increase your premium too in cases such as remodeling and adding a room in your home etc.
If you have recently done any improvements or safeguards, inform your insurance company immediately not waiting until your policy renewal. The events and items covered by your insurance policy differs based on your policy and insurance provider. The conditions and limitations of the coverage vary upon your specific policy. Inform insurance company ahead of time if you have any expensive structures in your property. This will act as a documentation for coverage in case any mishap happens.