Damage from sudden windstorms, hurricanes, tornadoes, wild fires, and earthquakes has made it clear that homeowners are more vulnerable to significant damage than ever imagined. To cover losses, insurers are greatly reducing potential maximum claim payouts by requiring policyholders to bear a greater share of the costs. In TSCL's 2012 survey of senior costs, homeowner's insurance grew 85% from 2000 – 2012 ranking as the fifth fastest growing senior expenses. Here are 5 tips to keep costs in line:
1. Compare cost and companies: The price you pay for homeowners insurance can vary by hundreds of dollars. Check the yellow pages for a list of companies serving your area and get quotes. Don't consider price alone. The insurer you select should also deliver quality service if you have to file a claim. Check the financial stability of the company you are considering with rating companies such as A.M. Best and Standard & Poors.
2. Understand your deductible and raise it if prudent. Deductibles are the amount you have to pay toward a loss before your insurance company starts to pay a claim, and you can lower your premiums by raising your deductible. If you live in a coastal state, check first to see if you have a separate hurricane deductible. Traditional deductibles for fire, theft and other disasters are usually a flat dollar amount such as $500 or $1,000. Hurricane deductibles are generally calculated as a percentage and typically vary from 1% to 5% of a home’s insured value. If your home is insured for $300,000 and the policy has a 5% deductible, you would be responsible for the first $15,000 of a claim in the event of a hurricane.
3. Use the right home cost. The land under your house isn't at risk from theft, fire, and other perils so don't include its value in deciding how much insurance to buy. If you adjusted your homeowners coverage prior to 2007, compare current rebuilding costs with the coverage you purchased then to make sure your premium isn't based on an inflated home value.
4. Seek out senior discounts. Since retirees generally stay at home more than working people, they are less likely to be burglarized and may spot fires sooner. Retired people also have more time for maintaining their homes. If you’re at least 55, ask for a discount. You may qualify for up to 10%.
5. Make your home more disaster resistant. Find out from your insurer what steps you can take to lower your premiums by making your home more resistant to natural disasters. Consider modernizing your heating, plumbing and electrical systems to reduce risk and supply your insurer with copies of receipts to qualify for lower premiums.
To learn more about saving money on homeowners insurance, get a free brochure "Twelve Ways to Lower Homeowners Insurance Costs" from the Insurance Information Institute. Download a copy at www.iii.org/ or call 1-212-346-5500.