Homeowner’s Insurance

So you have decided to take the plunge. You’ve had it with that little shoebox of an apartment and decided it is time to buy a house. You’ve driven through countless neighborhoods, walked through more model homes than you can count, and accumulated enough real estate catalogs to wipe out the Brazilian rainforest. But at last you have settled on the perfect choice, your new home, where you will raise your family and live out your years in peace.

So you begin the process, and suddenly you find yourself inundated with all the various and sundry fees that come with purchasing a new home. Inspection fees, appraisal fees, etc, and then you come to find out that your payment may not be what you were originally told. The culprit? The lender figured too low on the homeowners’ insurance rates and you are looking at a much higher premium. The result? An increase of
$30-$40 in your monthly home payment. Talk about a hidden cost.

Obviously you need homeowners’ insurance. One fire alone will be enough to make you eternally grateful for the concept. But how do you go about finding it? And how do you know when you have gotten a great deal?

Of course you should look for premiums that you can afford, but you also want to make sure that you are adequately covered in the unlikely event of a catastrophe.

There are ways to save money and bring that premium down. The most logical choice is to shop around, comparing prices, rates, and premiums with a variety of companies and see who offers the most bang for the buck. Too many people fall into the trap of signing up the first company they talk to and remain blissfully unaware of the money they could be saving.

Remember that the higher your deductible, the lower your premium will be. The more you are willing to be responsible for, the greater the reward. I personally recommend taking the highest deductible possible, simply because the likelihood of ever having to use it is so low, coupled with the fact that it will make your monthly payments that much easier to live with.

Don’t make the common mistake of including the value of your land in the rebuilding estimates of your home. Doing so will send your premiums sky high.

Consider having all of your insurance policies under one roof. If you purchase automobile and homeowners insurance from the same provider, you may very well end up with some very attractive discounts. Just make sure the discounts still come out lower than buying separate policies from different companies.

Make your home safer, and less of a risk for the insurance companies. There is a reason that insurance companies want to know if you have fire alarms, burglar alarms, fire extinguishers, etc. All of these things create a safer environment for your home, reducing the risk for catastrophic events. As a result, all of them will contribute to your premiums going down.

Keep your credit score high and impressive. A good credit standing goes a long way, and can be instrumental in cutting your insurance costs. Doing this is as simple as paying your bills on time and keeping your balances within manageable limits. Check your credit on a regular basis (at least once a year) to catch any problems that might adversely affect your future big ticket purchases.

Get the government out of your life. If you have insurance on a government plan, consider going with a private firm. You may be surprised at the lower premiums and improved service.

Forge a long lasting relationship. If you have been with your insurer for a long time, one of the benefits may be long term policyholder discounts. Six years of insurance fidelity may result in 10 percent or more savings on your premiums.

Homeowners insurance is one of the more notorious “hidden costs” associated with buying a new home, one that can affect your payment to the point of making or breaking your new home deal. So take your time and shop around for the best possible quotes and make sure you get the most for your hard earned money.

True, you may never need it, but wouldn’t you rather have the peace of mind?

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