HOME INSURANCE - HOMEOWNERS INSURANCE
Why buy homeowners insurance? Loss or damage to your home and possessions from fire, theft
or natural disaster could be financially devastating. That's why you carry homeowners
insurance. It's money well spent, but wouldn't it be nice to spend a little less? What is Homeowners Insurance?
A "package" or multi-line policy providing the protection needed by most homeowners. The policy provides property insurance, including theft, with very broad coverage on both the building and the contents. Liability insurance is also provided. There are basically six homeowner forms available in most states, and they are numbered 1 through 6. Homeowner 6 is used for owners of condominium units. Homeowner 5 provides the broadest protection. Homeowner 4 is for use by tenants as it excludes building coverage. Homeowner 3, 2, and 1 are similar to Homeowner 5 except that they provide progressively less coverage respectively.
Find the Best Policy
Buying insurance is like purchasing almost anything: It pays to shop around. The more you research and compare before buying, the better your chances of finding the best deal. You'll also learn more about the types of policies and services available, which in turn helps you make a more informed decision.
Where Do I Find the Coverage?
Start where you buy your car insurance. Many companies offer discounts on second policies, so you may get a break if they also offer homeowners insurance.
Get quotes from a few other companies as well. Check the phone book for listings of insurance companies and agents, or contact your state insurance department. Another good source: Ask family and friends for a referral. Have they been happy with a particular insurer? Are there any they suggest you avoid?
After a few phone calls, you may find the premium for the same coverage differs from one company or agent to the next. Even so, don't base your decision solely on price; the quality of service you'll receive can be just as important. Does the company have a good record of customer service and timely processing of claims? Have complaints been filed with the Better Business Bureau? Finding these things out and comparing one company's price, service, coverage, and history to another's takes a little time. But it pays off in the end.
A Few Tips to Save You Money
Even if you've had homeowners insurance for years, and have no desire to shop for a new agent or policy, there are plenty of ways to save money. Here are just a few:
- Raise your deductible - A deductible is the amount you pay toward a loss before you can file a claim. The lower the deductible, the sooner your insurance company steps in. But you pay for this added protection with higher premiums. Raising your deductible can drop your insurance rates dramatically. Increasing a $250 deductible to $500, for example, can cut your insurance cost by as much as 12%.
- Don't insure your land - The losses covered by homeowners insurance -- fire, theft, and so on -- won't affect the land underneath. Don't include the land value when calculating the amount of homeowners insurance you'll need. If you do, you'll purchase more insurance than necessary, and have higher premiums to show for it.
- Senior discounts - If you're retired, you're likely to be home more (instead of at work), which means you'll spot problems sooner. You may also spend more time on repairs and maintenance work around the house, helping prevent other problems from developing. As a result, some companies offer discounts of up to 10% to qualified retirees.
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