Get a Better Deal on Your Homeowners Policy
Admit it: You love a good deal. That’s why you spend time comparison shopping to find the best price on a car, TV, computer, airline tickets or even a new toaster. But when was the last time you did some comparison shopping to make sure you were getting the best deal on your homeowners insurance?
The Insurance Information Institute estimates that the average annual premium for homeowners insurance is $879. (Florida has the highest average premium, at $1,534.) If you’re paying more than that, you might want to shop around to see if you can get a better deal. The July 2010 issue of Kiplinger’s Personal Finance offers these tips:
The best way to comparison-shop is to establish the types and amounts of coverage you want, then call insurers for apples-to-apples price quotes.
You could consult an independent insurance agent or broker who represents multiple insurers (see www.iiaba.org to find agents near you). But be sure to contact agents who represent single insurers, such as Allstate and State Farm, as well as direct insurers, such as Geico and USAA. Chubb and Fireman’s Fund are among the few remaining insurers that pay out whatever it costs to rebuild, but they charge 15% to 25% more than you’ll pay for policies with a limit and target homes with a replacement value of $500,000 to $1 million. To make sure you have the right amount of coverage, they send an appraiser to your home every few years.
If you go it alone, visit http://map.naic.org to find your state’s department of insurance, which has a list of insurers licensed to do business in your state and may also show average premiums by insurer. You can check out an insurer’s claims and complaint history at https://eapps.naic.org/cis.
Agents may underestimate the cost to replace your house if they fear that they’ll lose your business to a lower-priced competitor, says Amy Bach, executive director of United Policyholders, a consumer-advocacy group. Or the promise of a bigger commission may inspire independent agents that represent multiple insurers to sell you as much coverage as they can, says J. Robert Hunter, of the Consumer Federation of America. Besides getting your own estimate of your home’s replacement cost, let agents know that you’re shopping and that you’ll confirm their estimate in writing.
You may want to reshop your auto policy at the same time because you can probably get a multi-policy discount (typically 15%) if you buy both policies from the same insurer. Ask about discounts for security systems, smoke alarms, deadbolts, fire extinguishers and sprinkler systems.
Finally, take the biggest deductible that you can afford. Raising your deductible from $500 to $1,000 could save you up to 25% on your premiums and discourage you from filing small claims that could prompt your insurer to raise your premium or ultimately cancel your policy.