As part of our series on homeowner insurance, last week we discussed the reasons for the rate increases and recent difficulties in the home insurance market. Click here for a review of that article. This week, we address the steps you can take to ensure you are getting the best policy for your premium.
Consider raising your deductible-
Just a few years ago, most home policies had a $500 deductible. The deductible is the portion of the claim you would be responsible for. While you do not have pay this amount upfront, the settlement you receive will be reduced by this amount. We recommend considering a $2,500 deductible. Most companies price this deductible to be the best value. If you have a small claim, it probably will not make sense to file it; and if you have a large claim there is opportunity to make choices how you repair the damage that will help offset the deductible. Check with your Agent/Broker to see if the higher deductible is worth the premium savings.
Ensure your insurance company has the correct features of your home–
All insurance companies use a building cost program to estimate the cost to rebuild a home with your same features in your neighborhood. For example, if you have marble floors your rebuild costs will be higher versus if you have linoleum flooring. Ask your agent for a copy of the report that shows the features of your home they are using to determine your rebuild cost. The report may have incorrect information which can lead to being insured for the wrong amount.
Leverage all possible discounts-
Insurance companies give many discounts and you need to be sure that you are leveraging everyone you qualify for. Most companies give a large discount (15% – 20%) if you insure your Home and Auto insurance with them. You will also get a similar discount on the Auto insurance as well. If you have recently replaced your roof, plumbing, or heating and air system, you may qualify for a discount. Discounts are available for 3rd party monitored burglar and fire alarms. Several companies are starting to give discounts if you have a water flow monitor, especially if it is one that will automatically shut-off the water is a leak is detected. Check with your Agent/Broker to ensure you have every discount you qualify for.
Shop around to other companies-
Insurance companies typically change rates at least once per year. These rates are based on each company’s loss results and must be approved by the Department of Insurance. Over time, insurance company rates start to differentiate from each other. While we do not advocate changing for a small premium difference, we do believe it is important to check every few years. If you are with a broker, they can check multiple companies for you. Checking rates also creates an opportunity to look at what you have and make sure it is still current. Perhaps you forgot to let the Agent/Broker know you remodeled your kitchen or purchased a new piece of jewelry that you want to insure.
As mentioned in the last weeks article, there are several market pressures pushing rates up. These are just a few steps you can take to ensure you are getting the best value from your current policy. Next week we will discuss what happens if you are canceled due to your home being in a “fire area” and how coverage works with the California Fair Plan.
We offer complimentary reviews and are willing to answer any questions you have about your coverage.