Homeowners insurance is a vital aspect to all homeowners, as the insurance will protect you in the case of a natural disaster, burglary, fire, or other terrible things that can occur in which you lose your home or your property.
What We'll Cover
Of course, everyone would like to save money on their homeowners insurance, but many have no idea what to do in order to decrease the cost without giving up this much needed protection.
There are seven ways you can decrease the cost of your home insurance.
1. Have a good credit score. Yes, insurance companies look at your credit insurance to determine if you are risky to insure. Those with low credit scores are deemed to be risky, so the better your credit score the lower your insurance costs.
2. Add security features to your home. Such gadgets as dead bolts, burglar alarms and motion detectors will help keep thieves out and also give you better rates on your home insurance.
3. Smoke detectors and fire alarms will help with fire prevention and will also lower your home insurance rates.
4. Keep your home maintained and up to date. Homes that are well-maintained do not caught fire due to faulty wiring and flood due to old rusty pipes. If your roof is frayed, you can even get a discount for adding a new roof to your home.
5. Combine your auto insurance, home insurance, and health insurance through the same company. Some insurance companies offer discounts will they take care of all your insurance needs.
6. Only get the coverage you need. You should not be paying for things you do not need in the policy. This can include insurance in case your dog bites a neighbor or does damage to the neighbors fence, if you no longer have a dog, you are paying for insurance you no longer need. If you live on top of mountain where it will never flood, you do not need to add flood insurance, and so on and so forth.
7. Compare! The easiest way to decrease the cost of your home insurance is by comparing the rates of local companies. All insurance companies offer different rates and you may be able to save hundreds of dollars just by comparing the coverage and rates of other insurance companies.
This guide should help you save all kinds of money when looking for the best home insurance. You can find a cheaper home insurance policy while ensuring you have the protection you need and deserve for your dream home.
How and why Does Credit Scores Affect Home Insurance?
Today, all insurance companies are now looking at a person’s credit history before issuing home insurance. Honestly, this should not have anything to do with a person’s ability to have protection on their homes, but the new standard is still there.
The Insurance Information Institute explained that the credit information is used by home insurance companies to create a type of formula that allows them to give each person an insurance risk score. This score is supposed to determine the likelihood of a person filing an insurance claim.
The categories that home insurance companies will look at include to determine your insurance risk score include your payment history, amount of credit you owe, the time you have had the credit, new credit accounts, and they type of credit you have. The payment history is 35% of the score, the amount of credit you owe is 30%, the time you have had the credit is 15%, the new credit is 10% and the types of credit is 10% or close to these percentages.
A closer look
Your payment history will include how you have paid your bills in the past, late, on time, if there are any collections, bankruptcies, etc… Amount of credit or money owed is what your balances are on the loans or credit cards. The time you have had the credit shows the length of each loan or credit card. New credit will include any and all new credit you have established as well as all inquiries on your credit. Types of credit of course are loans, credit cards, etc.
Of course, in order to obtain a loan, your credit is also checked and the same categories are used, only with insurance companies, the weight that is put on one category can be quite different from from lending company.
An insurance company is looking for stability and reliability. Insurance companies want customers that are reliable and have a pattern of practicality with money matters.
No one knows the exact formula being used to determine a person’s insurance risk score, but the better your credit rating the better you will score. Insurance rates will be lower for a person that has an excellent insurance risk score whereas someone with an unreliable history will have to pay more for the same insurance.
A study at the Bureau of Business Research at the University of Texas released in 2003 shows a strong relationship between credit history and filing an insurance claim, thus the reason so many insurance companies are now searching for a formula that works to determine if a person is a bad insurance risk.
Do I need Home Owners Flood Insurance?
The good news is that if you live in an area that is prone to flooding, the lending company will require you to purchase flood insurance. Banks realize that if you purchase a home in what is known as the 100-year flood plains, that you will have a chance that this 100-year span will occur during the time you are paying on the loan. They want to protect their assets, so you will need to purchase flood insurance. On the other hand, look at Nashville, Tennessee, which is not prone to flooding, what happens in this case? This does not mean, as you can see from the news, that a flood will never happen.
Some of the areas may be on the map as 500-year flood plains, meaning a flood only occurs every 500 years unlike the 100-year flood plains in which a flood occurs every 100 years. The sad news as in the case of Nashville, which is in the 500-year flood plain, is that a devastating flood occurred and the time limit of 500 years was not even close. In areas where the homes are located in the 500-year flood plains, most banks and even insurance companies do not mention flood insurance to their clients. In Nashville, the sad news is that homeowners even living the life of luxury on the river where told by their builders, lending company, and insurance agent that they were not in a flood plain and had nothing to worry about at all. At the time of the flood, only 4,100 families had flood insurance, which did not include many of the homes set along the river.
The best way to decide if you need flood insurance is not talking with anyone but by during some research. Check to see if you are in flood plain. No matter if you are in the 100-year flood plain or 500-year flood plain, you should consider flood insurance.
If you live nearby a lake, a river, or even a creek, you may also want to consider flood insurance. No one can say that these bodies of water will never overflow and send the water gushing toward your home. The option of flood insurance should be one that you make after doing some research on the area and deciding if it is worth the risk of not having flood insurance.
Insure your valuables with home insurance
You may not realize the importance of insuring your valuables and you may have your contents included with your home insurance. All home insurance policies cover the contents, but in some cases, the amount you will be given to replace lost items due to theft or a natural disaster may not cover expensive valuables.
In most cases, you will be asked to provide a dollar amount to replace everything in your home. This figure should replace all items in your home no matter if we are talking about your clothing or your great grandmother’s china. Most homeowners insurance has limits on certain items. You may be shocked that you can only receive $1,500 for the china when it was appraised at $15,000. Each insurance company has limits on what you can collect for valuables including collectibles, jewelry, furs, coins, and stamps. If you have valuables, you should ask the limit the insurance company has on these items with the standard policy.
There are special insurance policies known as floaters that you can add to your home insurance policy to cover those valuable items via agreeing on a specific dollar amount, which will be scheduled on the policy. You may even be able to insure your valuables under what is known as a blanket policy with an agreed upon value such as all your jewelry at $50,000 as the amount that will be covered. You can always get your valuables appraised which would be a better way to go as then, you will have a better idea of the value of these items.
A floater is not attached with any deductibles, so your coverage begins with the very first dollar is lost, and are usually considered “all risk” which means that are types of losses are included unless exclusions have been written in the policy.
To make sure you have enough coverage for your valuables no matter what they might be you will need to take inventory. Write down each item whether it is a coin collection, stamp collection, or an autographed photo of a celebrity. Receive an appraisal of each valuable. Be sure you visit the proper appraiser to ensure you are getting the best appraisal; a jeweler may be able to appraise jewelry but in most cases will not know the value of a stamp collection. Talk with your insurance company to determine if you need floaters or if the valuables can be included in your home insurance at their true value. Your insurance agent may be able to help you find the cheapest home insurance while ensuring your valuable are under the protection they need if lost or stolen.
Be sure you follow the best way to preserve your valuables such as proper storage and care in order to ensure your insurance policy will cover the full value of your collectibles, jewelry, antiques, or other items.
Home Insurance Tips For Peace of Mind
After purchasing a home, protecting that home is the most important thing a homeowner needs to do. The problem is that many homeowners do not even read their policy and just accept whatever their insurance agent tells them they need or they may even take the smallest amount of protection in order to save money. The problem is that they do not learn what this does until it is too late and they find themselves in trouble.
All homeowners need to ensure they have enough protection in order to protect not only their investment but also their home. If a disaster strikes, and you do not have enough coverage you could find yourself without a home at all unless you have a savings account to help pay to rebuild.
Your home insurance should cover what it would cost to replace or rebuild your home in the case of an accident. Too many times, homeowners only cover the home for the current market family at the time of purchase. A few years later, when disaster strikes it may take thousands of dollars more to rebuild or replace your home. You must consider this or at least update your policy every few years as prices increase on materials, labor, and even the home values in your area.
After you determine the cost to replace the home, you now have to consider the cost of replacing all other items on your property such as fences, gardens, barns, outbuildings, or any other items.
Now, you have the coverage you need for your home and the property, but what about your personal belongings? You of course have clothing, furniture, televisions, entertainment centers, and probably jewelry among many other things. For some items, you may want to have the items appraised in order to provide enough protection to replace some valuable items.
In order to have peace of mind with your home insurance is that you need to have enough insurance to replace all of the items you can lose just in case of a disaster. There is nothing worse than having a tornado, hurricane, flood, or other disaster hit your home, but not having protection is the worst of all.
Along with protection to recover any losses you should also look at adding protection for injuries. This type of coverage will cover any person that receives an injury while at your home. This can include such things as tripping on the sidewalk, falling down the stairs, or other injuries that may occur. If you have a pet, this protection will also provide protection in case your dog bites someone.
The only way to have peace of mind is to ensure you have adequate insurance to protect you in all ways.