Home insurance policies may all seem identical, but knowing how to shop for one can save you hundreds of dollars or more a year.
Here are seven common-sense tips from smart shoppers that all homeowners should heed:
Act quickly. After your offer to buy a house has been accepted, start shopping for a homeowner policy. If you wait, your title or escrow company will call insurance companies on your behalf right before closing, and you’ll pay whatever they say. To find good companies, shop around, ask friends, contact your state insurance department and check with the National Association of Insurance Commissioners.
Know what you’ve got. In order to give you the best rate possible, insurance agents need to know a lot of information about your house. Some of it can come from public records, but most of it will come from you. Be prepared to answer all of their questions – everything from the square footage and the location of the nearest fire hydrant to the age of the roof and the wiring.
Get at least three quotes. This is a good idea whenever you make a big purchase. Not only will you be able determine which company is offering you the best price, but it help you compare the services being offered. You also can check with rating companies such as A.M. Best and Standard & Poor’s to determine the financial stability of the insurance companies you are considering.
Consider a multi-policy discount. Most insurance companies offer discounts to those who also buy auto and/or life insurance from them. If yours doesn’t, switch to one that does. These multi-policy discounts can save homeowners hundreds of dollars a year.
Learn about lesser-known discounts and take advantage of them. Do you know you may be eligible for a discount of about 10 percent if you are 50 or over? And some insurance companies lower premiums for houses with alarm systems that report to a central station. Those who live in a flood zone can get a discount on flood insurance if they have vents in the foundation of their houses that allow flood waters to escape. Ask your agent about other discounts for which you might be eligible.
Pick the right deductible. A deductible is the amount of money you’re willing to pay out of pocket before the insurance company begins paying toward your claim. Figure out how much you’re willing to pay. If you expect your insurance company to pay only if you have major damage, then choose a high deductible and your premium will be small. Insurance companies typically start giving discounts with a $500 deductible, and deductibles usually can be as high as $10,000.
Update your policy every few years. Why? Things change. Coverages change, and so does the value of your house. If your house decreases in value, as millions have in recent years, you may be over-insured, and that means you’re paying too much on your premium. Call your agent and ask him to make the necessary adjustments.