How to Save Money on Homeowners Insurance

Premiums you pay for homeowners insurance can vary not only by insurer but by level of involvement in the insurance buying process. Although Ohioians historically pay some of the lowest insurance premiums in the US, it’s no secret that premiums are rising.

According the National Association of Insurance Commissioners (NAIC), Ohio insurers haven’t made a profit on homeowners premiums for years. The NAIC “Profitability by Line by State” study finds that the Ohio homeowners insurance market has operated at a greater loss than the US average since 1996. For every dollar collected in homeowners insurance premiums in 2002, Ohio insurers paid out nearly $1.19; while the national average was $1.06 for every dollar collected.

You can take the following measures to help keep premiums affordable:

• Shop around. Contact several insurance companies and agencies to discuss coverage, costs, claims handling and service. Check company financial ratings for stability. Ask others for recommendations and use the Web for reviewing potential insurers.

• Protect your home against typical perils. Routine maintenance helps prevent claims, a leading cause of premium increases. These include:
  o Keep fire extinguishers in fire-prone areas such as the kitchen and laundry.
  o Modernize plumbing, heating and electrical services to reduce the risk of fire and water damage.
  o Regularly check your roof, down spouts and pipes for clogs or leaks.
  o Discourage crime by using exterior lights at night and deadbolt locks.
  o Repair loose railings, steps or walks.

• Raise your deductible. By raising your deductible, you’re responsible for smaller losses, lowering your premium and chances for frequent claims. Raising a deductible from $250 to $500 could lower your annual premium as much as 12%. A $1,000 deductible could mean as much as a 25% savings.

• Ask about discounts. Some companies provide discounts typically in the
  8–15% range for new construction, since newer homes are built to updated codes. Some insurers offer discounts for monitored home security systems. If you’ve had your home insured with the same company or agency for several years, you may also be eligible for an additional discount.

• Review policy annually. Update your coverage based on major purchases or recent home improvements. Double-check how far your home is from a water source such as a fire hydrant as well as the location of the nearest fire station. If you carry an insurance endorsement on an item that’s depreciated, reduce or eliminate the endorsement for a savings.

• Buy all insurance from the same source. You can reduce costs 5–15% by using the same provider for all your insurance needs.

• Check on group coverage resources. Check with employers, alumni and professional trade groups who may offer insurance packages at competitive rates.

• Don’t insure your land. Although it’s part of the market value, it doesn’t require insurance protection.

• Opt for guaranteed replacement cost. Although more expensive, it could save you money in the event of a major loss. A “replacement cost” policy pays to replace the damaged property or loss, regardless of its age and condition, with materials of similar kind and quality. An “actual cash value” policy provides reimbursement at the depreciated value.

• Contact the Ohio Department of Insurance for a homeowners guide. A good resource for general information, including average premiums by company. Call 1-800-686-1526 for a copy or access online at www.ohioinsurance.gov.

• Avoid frivolous claims. Submitting a claim after years of paying premiums is justifiable, but frequent claims may mark you as a high risk. Pay for losses that are close to your deductible.

• Cover your home office. Don’t assume automatic coverage. Protect special home business risks.

• Don’t smoke. Some insurers offer discounts to nonsmoking households.

• Stay with your insurer. Some insurers reduce premiums by 5% after three to five years, and up to 10% if you remain a policyholder longer.

• Keep tabs on your credit. An insurance score is a snapshot of your insurance risk based on information in your credit report. It reflects your bill payment patterns over time, with more emphasis on recent information. Some companies take insurance scores into account when assessing homeowners insurance risk. Click here for more information on credit bureaus and insurance scoring.

• Make insurance part of the homebuying process. Choosing a home less prone to natural disasters or fire can mean a significant savings.