Buying Tips

Homeowner's and renters insurance can vary tremendously both in coverage and in price. Select a company based not on price alone, but on service quality. Each company is unique. But, there are a few ways to ensure you get the most for your insurance dollar.

Consider homeowner's insurance before you purchase a home to save between 5 and 15 percent. Some insurance providers discount property coverage if your home is close to a fire hydrant or in a professional rather than volunteer fire district. If the electrical, heating and plumbing systems are less than 10 years old, your coverage could be less. If you live in a brick home (for those on the East coast), you're less prone to wind damage. If you live in a wood-framed home (if you live near earthquake faults), you are less prone to quake damage. Flood and earthquake damage protection is not covered in standard homeowner's insurance and could run up to $500 per year depending on the location of your home.

Your deductible is the out of pocket expense you pay toward a loss before the insurance company begins coverage. The higher your deductible, the more you are responsible for. Most companies recommend at least a $500 deductible. If you increase your deductible to $500, you may reduce your premium up to 12 percent. Increase it to $1,000, and save up to 25 percent. Ultimately, you could increase your deductible to $5,000 and save up to 37 percent depending on which insurance company you use. This is a chance, obviously, as you will have to pay this fee out of pocket should anything occur.

Group Homeowner's or Renters with Auto Insurance. Some companies offer discounts fo 5 to 15 percent if you buy two or more insurance policies with them. If your auto insurance company offers home insurance, you could benefit from using the same company for both. But be sure the combined price is lower than it would be if you used separate insurance companies for each.

Some alumni, business associations or employers negotiate discounts on insurance for member. Look into the organizations you're a member of to see if you would benefit from this perk.

Secure Your Home. A smoke detector, burglar alarm or dead bolt lock can usually reap discounts of at least 5 percent. If you install a high-tech sprinkler system, fire and burglar alarm that rings the police, fire or monitoring station, you may obtain a discount of up to 20 percent. Before you buy a system solely for this reason, check with your insurance company to make sure the system aligns with their discount policies.

Consult with your insurance company on ways you could make your home more resistant to natural disasters. Adding items like storm shutters, reinforced roofing or retrofitting older homes could protect from storms or earthquakes. Heating, plumbing and electrical modernization could also reduce the risk of fire or water damages.

Consult with your insurance company about policy discounts for non-smokers.

Because the land below your home is not at risk of theft, wind storms, fire or natural disaster, don't include it in the value of your homeowner's insurance policy. This coverage raises your premium.

Don't automatically renew the same coverage year to year. Reevaluate new purchases and remove discarded property from your policy. Some items may drop in value as time passes, also. So reduce or cancel your floater, or the extra insurance you purchase for non-covered items.
Some insurance companies offer discounts to individuals who've maintained their policy with them for several years. Discounts could be as great as 5 percent for 3 to 5 year loyalty, or up to 10 percent for policyholders of six years or more.

Buying homeowner's insurance through a government plan if you live in a high-risk area may not be your best option. Shop around with an insurance agent or contact your state department of insurance. You may be able to buy lower priced insurance in the private market.

Check with your insurance company to discover state or population specific discounts. Some companies offer retired individuals lower rates because they are home more often and less likely to fall victim to burglary, can spot fires sooner and have more time to maintain their property.

Pay Premiums Annually: This usually is cheaper than paying monthly or quarterly because you eliminate a billing fee

Coordinate Liability Coverage: Every homeowner's policy comes with some liability coverage. However, if something happened and you really needed the coverage, there's no way you would have enough. You can buy a separate "excess liability policy" that is more than your net worth. Once you've done this, lower the amount of liability coverage in your homeowner's policy. For example, if your excess liability policy agrees to cover anything over $300,000, the liability in your homeowners' policy should only equal $300,000.

Limit Your Claims: The April issue of Money magazine reports: "Frequent claims, even as few as two in five years, will likely mark you as a bad risk." Insurers do consider the claims' severity. So, a freak hailstorm that damaged your roof probably won't be held against you. But two claims for break-ins may signal that you're not properly protecting your property. Money magazine reports the biggest red flags are water claims, which accounted for 32 percent of all insurance claims in 2001, up from 24 percent in 1997.

Get a CLUE: If you're getting ready to buy a house, Ask to see its CLUE report which shows every insurance claim made on the house in the past five years. The report is from the Comprehensive Loss Underwriting Exchange, a privately run national electronic database for the insurance industry. If there are several claims on the report you can anticipate having trouble obtaining your own policy on the property.

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