How to find affordable homeowners’ insurance

Here are some tips from the Insurance Information Institute to help you find lower cost insurance:

• SHOP ~ Get at least three price quotes.

• INSURERS ~ Get quotes from different types of insurance companies. Some sell through their own agents. Some sell through independent agents who offer policies from several insurance companies. Others sell directly to consumers over the phone or via the Internet.

• DEDUCTIBLE ~ Raise your deductible. A deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim. The higher your deductible, the more money you save on your premium. Consider a deductible of at least $500. If you can afford to raise it to $1,000, you may save as much as 25 percent.

• DISASTER-PRONE ~ If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters.

• HOME / AUTO ~ Buy your home and auto policies from the same insurer. Some insurance companies will reduce your premium by 5 percent to 15 percent if you buy two or more insurance policies from them.

• STORM-PROOF ~ Make your home more disaster-resistant. You may be able to save on your premiums by adding storm shutters and shatterproof glass, reinforcing your roof or buying stronger roofing materials.

• MODERNIZE ~ Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

• REBUILDING COST ~ Don’t confuse what you paid for your house with rebuilding costs. The land under your house isn’t at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don’t include its value in deciding how much homeowners’ insurance to buy. If you do, you’ll pay a higher premium than you should.

• DISCOUNTS ~ Ask about discounts for home security devices. You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies may cut your premiums by as much as 15 or 20 percent if you install a sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations.

• OTHER DISCOUNTS ~ Seek out other discounts. Companies don’t offer the same discounts in all states. For example, if you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

• GROUP COVERAGE ~ See if you can get group coverage. Does your employer administer a group insurance program? Check to see if a homeowners’ policy is available and is a better deal than you can find elsewhere. In addition, professional, alumni and business groups may offer an insurance package at a reduced price.

• LOYALTY ~ Stay with the same insurer. If you’ve been insured with the same company for several years, you may receive a discount.

• ANNUAL REVIEW ~ Review policy limits and the value of your possessions annually. You want your policy to cover any major purchases or additions to your home. But you don’t want to spend money for coverage you don’t need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater.

SUMMARY:

When you’re buying a home, consider the cost of homeowners’ insurance.

The price you pay for homeowners’ insurance depends in part on the cost of rebuilding your home and the likelihood that it will be damaged by natural disasters or that it will burn down. You may pay less if you buy a house close to a fire hydrant or in a community that has a professional fire department.

Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, you’ll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides information on flood insurance on its Web site at www.fema.gov/business/nfip.

Source: Garrison Wells, The Sun News, Myrtle Beach