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February 2010
Getting the Best Value in Your Homeowners Insurance
Homeowners insurance can vary by hundreds of dollars with prices based upon the home value, current condition, even your personal credit rating. Here are some tips to help you find the best coverage for your new home (or even save a few dollars on your current insurance).
First, take sometime to shop around. Ask friends, check with neighbors, surf the web or contact your state insurance department. Ask questions about any complaints filed in your state against the insurance company you are considering and get the typical rates charged. This information is usually readily available from the states.
The financial stability of the insurance company you are considering is also important. Major disasters have been the downfall of insurors in the past and while you don't want to think the unthinkable, you should plan ahead. Rating companies such like A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com) can give you the insurance company's rating.
Next, look at raising your deductible to save money on the premium.
Each policy has a deductible amount that must be paid by you before any claims are paid by the insurance company. If you can afford to raise your deductible to $1000, your rates may decrease as much as 25%. But keep this in mind, if you have to replace a roof, you'll pay $1000 of the repair out of your pocket.
Be sure you are only insuring the cost to rebuild your home, not replace the land under it. The land under your house doesn't suffer from windstorm, fire or theft so don't include land value when considering how much insurance to buy, this will keep your premium down.
Consolidate your insurance for best prices. Many companies offer home and auto discounts when bought from the same agency. When you are shopping for prices be sure to consider the price of placing all your business with one company to lower rates up to 15%.
Plan for disasters - make your home safe. Ask your agent what you can do to minimize damage from potential disasters. Storm windows, reinforced roofing, modernizing heating, plumbing and electrical systems are all ways that will make your home more resistent to the elements and save money.
Make your home secure. Smoke detectors, security systems, dead-bolt locks, even sprinkler systems can reduce your rates up to 20%.
Maintain a good credit record. Insurance companies are turning to credit ratings as a way to cut costs by charging more to high credit risk home owners. Keeping a solid credit history can cut your insurance costs. Insurers should advise you of any adverse action, that your credit rating may cause, many states mandate the notice given to you.
Consider where your new home will be. Some insurance companies charge less if your home is close to a fire hydrant. If the plumbing, heating etc. in your home is less than 10 years old you may find better rates as well. Consider checking the Comprehensive Loss Underwriting Exchange (CLUE) report of the home you are buying. Here you'll find the claim reports of the home and it may alert you to potential problems in the past as well as give you information as to why the insurance rate is being quoted as such.
Remember that flood insurance is not covered by a standard homeowners policy. If you buy a house in or near the flood plane (Wichita has several area) you'll have to pay for a flood insurance policy. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at FloodSmart.gov.
Once you've done your homework and price comparison you'll feel good about the coverage you are getting for the dollars paid.
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