Your home is more than just a roof over your head. It is probably one of, if not THE biggest investment you’ve made in your life. But did you know that it can also result in one of the biggest losses you might ever have? If you are improperly or underinsured, one bad accident, storm, or injury could cost you your home – and more. It is critical that you have the right kind - and right limits - of insurance for your home.

There are ways to get the right coverage without being “insurance poor.” The best way is to talk to an independent insurance agent - they will make sure they get you the best deal possible by comparison shopping different companies. There are steps you can take, on your own or with your insurance agent, that will help ensure that you have the best possible chances of spending less for better home insurance coverage.

Home Security – Some companies offer a varying degree of discounts for home security improvements. Insurance companies have been known to offer 5% – 20% discounts for having systems to prevent loss, such as:

  • Smoke detector
  • Burglar alarm
  • Dead-bolt locks
  • Sprinkler system
  • Fire & Burglar alarms that dial the authorities or monitoring stations

Not all systems qualify for a discount, so it is important to find out what kind of system is recommended by the insurance companies, how much it would cost to have the system, and how much you would end up saving on your insurance premium.

Don’t Insure the Land - What you paid for your house is not the same as what your rebuilding costs would be.

The price you paid includes the land under your house. But you don’t need to insure this. The land isn’t going to be stolen, or burn down, or blow away. If you include the land on your home insurance policy, you are paying too much.

Annual Reviews – The cost of your insurance is a reflection of what you owned when you signed up for the policy. Say your five-year old computer is no longer worth the $3,000 you paid for it. Reduce or cancel your endorsement. Don’t pay for what you don’t have!

Have you downsized, sold, or gotten rid of things in your home? Have you made major purchases? You should review your insurance policy annually to check your limits and what’s covered.

The most common changes to watch for are in the endorsements to your policy, which cover items like jewelry and computer equipment. Conversely, if you have upgraded or purchased items, make sure they’re on your policy!

If something happens and they’re not on the policy, they won’t be covered. Worse, if an accident occurs in part because of your purchase and it isn’t on the policy, your entire claim could be denied!

Replacement-Cost Coverage vs. Actual-Cash-Value Coverage -

  • Actual-cash-value coverage reimburses you for the cost of your property at the time of the claim, minus the value lost in depreciation over time, minus the deductible. This can result in a lower claim payout than you expect. If your TV is worth $50, for example, that’s all you’d get to buy a new one.
  • Replacement-cost coverage will reimburse the full value of an item based on the cost of purchasing a new one. The upfront cost is greater, but you are more likely to receive accurate compensation for your possessions. Make sure you keep at least two copies (and store one off-site) of:
    • Receipts,
    • Serial numbers,
    • Photos, and;
    • A Video recording of your possessions if possible.

Going Shopping – There are thousands of insurance companies to choose from, and somewhere out there is the best policy for you. The easiest, and often most affordable option is to have an independent agent prepare a home insurance quote for you. As independent agents, they are able to shop around for the best coverage and premiums available to you. But don’t base your choice on price alone – you should also consider:

  • Coverage and limits
  • Quality of service
  • Promptness
  • Claims service
  • Resources & Tools made available to you
  • Financial stability of company (should be “A” rated)

Raise Your Deductible - Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums.

If you can afford to raise your deductible to $1,000, you may save as much as 25 percent. Remember, if you live in a disaster-prone area, your insurance policy may have a separate policy/deductible for certain kinds of damage.

  • If you live near the coast in the East, you may have a separate windstorm deductible…
  • If you live in a state vulnerable to hail storms, you may have a separate deductible for hail…
  • If you live in an earthquake-prone area, your earthquake policy has a deductible…

Disaster-Proof Your Home - Talk to your insurance agent about what you can do to make your home more resistant to windstorms and other natural disasters. By modernizing your home and reducing the risk of damage, you can often save money on your premiums. The most common additions are:

  • Updating plumbing
  • Updating electrical systems
  • Adding a sump-pump to your basement
  • Storm shutters
  • Reinforcing your roof or buying stronger roofing materials
  • Retrofitting your home to protect it from earthquake damage

Combine Policies - If you have more than one kind of personal insurance (home insurance, renters insurance, motorcycle insurance or auto insurance), you can often save at least 10% by combining your policies with the same insurance company.

When Buying a Home – If possible to get a newer home, this is often better. You can sometimes get discounts of up to 15% on your home insurance, because newer homes are less likely to have something go wrong with the electrical, heating, or plumbing systems. Plus, the home itself is usually in better shape than their older counterparts.

Discounts – Discounts vary from state to state and company to company. Common discounts on insurance are senior discounts, employer discounts and professional organization discounts.

  • Seniors are often retired, which means they are home more than working people. Because of this, they are less likely to be burglarized and may spot fires sooner. If you’re 55 or older and retired, you may qualify for discounts of up to 10%.
  • Some employers and professional associations administer group insurance programs. These may offer better deals than you can get elsewhere.
  • Membership in particular organizations can also get you discounts – insurers tend to look positively on membership to organizations that show you are vested in the safety of your home or the community. Ask your agent about what organizations are included for your insurance carrier.

Stay with the Same Insurer – If you like your insurance company and you’ve been with them awhile, it’s often better to stay put. Long-term policyholders get discounts. Common discounts are at the three to five (3 – 5) year mark and six (6+) or more year earmark with an insurance company, which pull 5% and 10% discounts respectively. However, it never hurts to check periodically and get quotes.

Clean up Your Credit – A solid credit history can reduce your insurance costs. Check your credit record on a regular basis and correct any errors promptly so that your record stays accurate and in good standing.

High-Risk Areas – If you live in a high-risk area and use a government insurance plan, call your local insurance agent. There are often steps you can take that will allow you to buy insurance at a lower price in the private market.

Choose Your Location Wisely – Picking the location of your home wisely could cut your premiums by 5% to 15%. Common factors in premium reduction are:

  • Proximity to a fire station or fire hydrant.
  • Home is in a community with a professional, rather than volunteer, fire department.
  • Electrical, heating and plumbing systems are less than 10 years old.
  • East coast typically has more windstorms. Brick or masonry homes are more wind resistant.
  • West coast usually has more earthquakes. Wooden frame homes withstand earthquakes better.

Flood and earthquake insurance are not part of your standard homeowners policy. In high-risk areas, you may be required to buy flood insurance, which costs roughly around $400 per year. Earthquake policies are also available at most insurance companies, and cost depends on the risk in your area.

Get a CLUE - Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have.

Quit Smoking – Annually, thousands of home fires in the U.S. are caused by smoking. Some insurance companies have adopted discounts if all of the residents are non-smokers.

Electronic Payments – Many companies now charge up to $5 for mailed payments, so have your payments automatically deducted to shave that cost. Sometimes the deductions can come from your credit card, so you don’t have to worry if the money is in your bank account when payment time comes.

It is vitally important to make sure you, your family, and your assets are properly insured. Make sure you talk to an independent insurance agent. They will be able to get you the most complete coverage, and often, at the best price. Don’t risk financial disaster - get the assistance of professional to review your insurance policies. Our office will do it, for free, with no obligation to buy.

At Balcos Insurance, we do this because we’ve built this business on our reputation. We’re all in this together, and the better service we provide you, the better it is for all of us. Please call us today. Ensure you’re getting the protection that you and your family deserve.

(877) 783 – 0335

© 2009, Mark S. Balcos.  The reader assumes all responsibilities for his/her own actions in regards to any items discussed in this report.  Adherence to all applicable laws and regulations, federal, state and local, governing the use of any product or service described in this report in the US or any other jurisdiction is the sole responsibility of the reader.  The publisher and author assume no responsibility or liability whatsoever on the behalf of the reader of these materials. The reader is encouraged to consult directly with his/her insurance professional.

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