Lowering Homeowner Insurance Rates

It's Not as Tough as You Think

Aug 3, 2007 Felicia A. Williams

Purchasing a homeowner insurance policy is the beginning of a relationship between you and your insurance company. As with any relationship, open communication is key.

Saving money on your homeowner insurance policy is easier to do once you understand a few basics. Insurance companies have certain guidelines that they must follow and other rules are a bit more subjective and are up to the underwriter's discretion.

As long as you understand the difference between hard and fast rules as opposed to those that are 'bendable' you will be in a better position to know what questions to ask your insurance agent to help lower your rate.

Understanding the insurance company's underwriting and rating philosophy:

Named Peril vs All Risk: Being aware that an all risk policy is more encompassing than a named peril policy will help you to understand why one will cost more than the other. A named peril policy will only respond to those perils specifically named on the policy. All risk, on the other hand, will respond to all risks, unless specifically excluded. It's similar to telling a child to walk (named peril) as opposed to the all risk request 'don't run' (to which the child will hop, skip, saunter, walk, meander, mosey, jump…anything but run). All risk coverage is broader and thus costs more.

Deductibles: Depending on your insurance carrier and the state in which you live, you can save anywhere from 5% to 25% on your premium by increasing your deductible from $250 to $5,000 per claim. Take into consideration, however, that if you cannot afford the out of pocket deductible expense per claim, then it is wiser to go with the lower deductible. Make sure the savings is worth the additional risk.

Bundling Coverages: Purchasing more than one policy with an insurance company will earn a 'multi-line discount'. Insurance companies may offer a 5% or 10% credit. Therefore if you are looking for homeowner insurance, talk to your automobile carrier, or offer to give your auto coverage to your prospective homeowners carrier. Make sure you talk to your insurance agent about how much of a discount you will be entitled to.

Be Loyal: Staying with your insurance company for an extended period of time will earn a discount. Staying with a company for 3 to 5 years can earn a 5% discount and 6 years or more may earn up to 10%. Insurance company discounts vary from company to company so be sure to talk to your agent.

Group Coverage: Buying your homeowner insurance policy as part of an association or group translates into premium savings. Check with your employer. Many large companies offer employees the ability to join a job related association. If not, check with your Alma Mater. The University of New Mexico, for example, has a program through Liberty Mutual for which their alumni can save on homeowner and other types of insurance. AARP is another association offering premium discounts through Hartford Insurance Company.

Discounts: Talk to your insurance agent about company offered discounts. Most people are aware of senior citizen discounts, but did you know there are discounts for military personnel or for retired persons? No one will know better than your agent. Make sure you ask.

Shop Around: Always get more than one quote.

One underlying theme you may notice is to talk with your agent. Your insurance company is looking to enter into a partnership with you. By keeping the lines of communication open with your agent, your agent can offer advice on what you can do to your house, or what changes you can make as an individual to lower your homeowner insurance premium.

The copyright of the article Lowering Homeowner Insurance Rates in Insurance is owned by Felicia A. Williams. Permission to republish Lowering Homeowner Insurance Rates in print or online must be granted by the author in writing.

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