Control Your Home Insurance Rates

By Gary Bangstad on February 17th, 2010
Homeowners Insurance

Homeowners insurance rates are bound to rise over time. Hurricanes, earthquakes, floods, wild fires, wind, and hailstorms happen--often at great economic loss. In order to pay large claims following disasters, insurance companies must raise rates to have adequate reserves to stay in the business of insuring your home.

Inflation is another cause of rising rates. Homeowners insurance rates reflect the cost of replacing your home after a fire, including the increasing cost of expensive construction materials.

You can't control natural disasters or inflation; however, you can do a great deal to control your own insurance rates.

Fine Tune Your Homeowners Insurance Policy

First, try not to submit too many claims in a short period of time. As a rule, more than two claims in four years is likely to cause an increase in your insurance rates.

Also, consider raising your deductible. You can save money on premiums and may be less likely to file so many claims. Building a savings account to pay off smaller claims yourself, while insuring against major losses, is the key.

Loyalty (remaining with the same company over time) can also save you money--as much as 5%-10%. You might also save by taking advantage of multiple policy discounts with the same company. For example, use the same company for your car insurance policy, as well as your home insurance policy.

If saving money on your home insurance rate is important, think twice about adding luxuries to your policy like expensive jewelry, or risky items like recreational vehicles, trampolines, swimming pools, and even a potentially vicious dog. Your insurance rates are likely to rise when you cover such items under your policy.

Finally, make sure you yourself are a good risk. Insurance companies maintain risk profiles on customers called "insurance scores," which are based on claims history, credit scores, and driving records--just to name a few.

Reduce the Risk of Large Home Insurance Claims

Taking action to protect yourself and your family can keep your insurance rates low. You want coverage for the big losses, but if your house burns down, or if it is completely destroyed by flooding, your future insurance rates may rise. Just as it makes sense to protect your family, it makes sense to reduce the risk of large claims.

Here are some of the most important preventative measures you can take:

  • Install smoke and heat detectors near sleeping areas
  • Use fire resistant building materials
  • Take advantage of non-smoker discounts
  • Install adequate locks and burglar alarms--do not let newspapers and mail pile up in your absence
  • Subscribe to a home monitoring service

By taking these simple steps, you may keep yourself and loved ones safe while saving up to 15%-20% on your insurance rates.

Next, be sure to keep up the maintenance on your home. Because of the faltering economy, some people are not maintaining their homes properly. Be proactive in taking care of preventive maintenance such as fixing faulty wiring, keeping old furnaces in good repair, cleaning dirty chimneys, reinforcing or replacing weak roofs, and remedying termite problems.

Maintaining your home may keep both your family and your real estate investment safe.

Find a Better Homeowners Insurance Policy

What else can you do to keep your homeowners insurance rates from going up?

Shop around--home insurance quotes are free. When talking to an agent, be sure to ask if any discounts are available and exactly what your homeowners insurance policy covers. Some things, like flood protection, are not included under a basic policy.

If your insurance company raises your rates, call your agent and ask why. Maybe, you can find ways to bring your premiums back down. If not, you should consider looking for a new homeowners insurance provider. Compare home insurance rates from multiple insurance companies and choose the best policy for your needs.

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