If you have a mortgage, the bank will require you to have hazard insurance. If you do not have a mortgage, congratulations. You should still want to protect one of your greatest assets, your home.
Whether you’re buying your first home, or you have lived in your home for many years, there are issues to consider regarding your homeowner’s insurance.
I have compiled a list of the Top 10 Ways to Save on Homeowner’s Insurance.
Remember: Every insurance company has different criteria that will establish the final premium, yet there are similarities. Some criteria (location, construction, amount etc.), the consumer has no control. However, with knowledge of the criteria that consumers can control, you can qualify for premium discounts, additional coverage, and satisfy more companies’ underwriting requirements.
Understanding the insurance company practice called “skimming” is an important concept. Skimming is the underwriting process to accept only the better, “cream of the crop”, homes. By attempting to reduce or eliminate claims, the insurance carriers set higher standards for your home to qualify for their insurance program. If your home meets the higher standards, you are rewarded with a lower premium.
More Companies = More Options = Lower Premium
The following is a list of the common consumer-controlled criteria along with additional information:
1. Add central fire and burglar alarms.*
Nationwide, fire claims have the highest average severity. One in every 250 homes experiences theft each year with the average claim of $4,146. You can save up to 15% off your annual homeowner’s policy if you have central alarms installed.
2. Update heating, electrical, and plumbing on homes over 30 years old*.
Let’s face it, building codes 30 plus years ago are a lot different than current codes. Prior to 1980, the most common plumbing was galvanized plumbing. The issue is galvanized plumbing rusts. The plumbing of today (copper, pvc, etc.) does not rust. Updating your heating, electrical, or plumbing in your home, lowers the chance of a claim. Due to a lower hazard, you are rewarded with a lower premium.
3. Maintain Roof
Insurance companies desire roofing materials under 15 years old or have a minimum of five years of remaining effective life. You should consider removing any trees hanging over your roof especially if the trees are touching your roof.
4. Avoid aggressive dog breeds.**
In 2017, there was an estimated $700 million in claims due to aggressive dogs. If you own an aggressive dog breed, insurance companies will do one of four actions, charge you more to cover the dog bite claims, limit the amount of animal liability coverage, exclude the animal liability, or refuse to insure your home. If you are considering a new family pet, you might want to avoid aggressive breeds.
Most insurance companies consider the following breeds aggressive:
- Pit Bull
- Staffordshire Terriers
- German Shepherds
- Presa Canarios
- Doberman Pinschers
- Cane Corsos
- Great Danes
- Alaskan Malamutes
- Siberian Huskies
- Any dog that has a history of biting.
5. Avoid trampolines, diving boards, and pool slides.***
Though they seem to be all in the name of fun, there were 1,002,735 emergency room visits due to injuries associated with trampolines from 2002-2011. The result was over one billion dollars in emergency room claims due to sustained injuries. Trampolines, diving boards, and pool slides will disqualify your home for many insurance companies.
6. Consider not filing a small claim.
It seems contrary to the reason you have insurance, but did you know that homeowners who don’t have claims receive a claim-free discount? Furthermore, some companies will add an additional surcharge to the renewal policy due to claims. The surcharge may stay on the policy and renewals for five years. Consider the cost of replacing or fixing something first before turning in any small claim.
7. Acquire and maintain good credit.
In more recent years insurance companies use your credit score to rate your risk score for your insurance policies.
8. Maintain property – “pride of ownership.”
Most carriers inspect all newly insured homes. Insurance companies have 60 days to cancel for maintenance reasons. Make sure your home is maintained and is safe for your family and your visitors.
9. Increase the deductibles.
Some companies give good premium reductions for higher deductibles.
10. Request a homeowner’s quote including windstorm in the coastal areas.
Several companies are insuring the coastal homes with wind coverage. Often, the premium is less than just the wind and hail policy.
Here are five other things you can ask your insurance company about to save additional money on your insurance policy.
1. Packaging credits (multiple policies with one company)
2. Home visible to neighbors
3. Non-smoker household
4. Deadbolt locks on all exterior doors
5. Smoke alarms and fire extinguisher
It is always important to regularly review your policy forms. Verify that all endorsements are needed or desired. Maybe there are some you don’t need, or maybe there are some things you do need. For instance, if you have a home operated business and clients come to your home on a regular basis, do you have the right coverage?
The easiest consumer-controlled issue is how the protection is purchased. An established independent agency with at least ten different homeowner’s markets is strongly recommended. Currently, Independent Insurance Counselors has access to over twenty homeowner’s markets and several different policy forms. We do homeowner’s policies very well.
If your home’s location is in a coastal area, search for a coastal agency. A coastal independent agency should have several markets that include the windstorm and hail perils with the homeowner’s policy.
The key to lowering your homeowner’s premium is understanding the data that the insurance companies are crunching. The insurance companies will start with a low base rate. The home’s additional hazards will be evaluated. Additional hazards could include old galvanized plumbing, a pit bull, prior losses, a trampoline, and an unfenced pool with a diving board. The additional hazards could create an additional premium or disqualify the home. If the consumer acts to reduce a hazard, discounts are applied. An experienced and knowledgeable independent insurance agency with over ten markets is your greatest ally.
If you have questions on your homeowner’s insurance policy and want to make sure you have the right coverage call us at (281) 331-3131 and we will review your policy with you.