Home Owners Insurance And You

What's the best thing about your house? Is it your sunny kitchen? Or maybe it is your shimmering wood floors or your comfy looking bedroom.

Perhaps the best thing about your house is actually that it represents the largest part of your total net worth.

Whichever that is, you still have to safeguard your home with homeowner's insurance.

According to J. Robert Hunter, insurance director for the Consumer Federation of America, homeowners insurance premiums are should rise only by the expected inflation rates over the next year. This welcome news since just a few years ago the prices were high and availability was low.

Marshall McKnight, spokesman for the state Department of Banking and Insurance added, "The market remains a competitive one where homeowners' insurance shoppers can be selective."

The following are some ways to save money on home insurance policies:

First, compare several companies. A lot of homeowners think most insurance companies cost the same, but that can be a very costly error. Instead, you should use services such as ours to check out the rates and get quotes for several lenders in YOUR area. Just fill out the form on the right to begin.

"You can go from one company to another and pay twice as much," said Hunter.

He added, "And don't just call an agent and expect him to do the shopping for you. Most agents only represent a limited amount of policies and can't always get you the best rates"

There are two types of coverage: "replacement cost" and "actual cash value." The one you want to get is "replacement cost" because it pays yhou enough to get a new couch if yours is ruined, while "actual cash value" would only give you the $50 your 11-year-old couch is worth.

You also need to ensure your policy coves you for at least 80 percent of what it would cost to rebuild your house. Otherwise, even if it ends up not needing to be completely rebuilt, it could still cost more money than you think.

For example, if your house cost $200,000 to rebuild and your insurance only covered you for $100,000, you would only have half enough money to fix your home. Another example is that if there is a $10,000 loss, you only get $5,000.

It is very important to know how much it would cost to rebuild your house, and that isn't always easy to figure out. You probably know how much your house cost when you bought it, or maybe what you would sell it for on the open market, but this may not be the same as what it would cost to rebuild it.

It is recommended by the state Department of Banking and Insurance and the Insurance Council of New Jersey that homeowners ask their insurer to get them this information because they are the ones able to figure it out based on the size and location of your house.

Remember to think hard before you put in claims for minor damage on your home. Your premiums could increase dramatically after putting in only two claims. If you can afford to fix something yourself, then you should do so.

Another way to save big bucks is to consider getting a higher deductible.

"If you're not filing a small claim, you shouldn't pay for the premium that would cover," Hunter said.

"For every dollar you pay to your insurance company, the average policy pays you back 60 cents," Hunter said. Where does the other money go? It covers the insurers' overhead and profit margin. That means paying for your own small losses can save you a lot of cash.

Nearly 20 years ago, Hunter took the money he saved by raising his deductibles on his house and vehicle and put the money in a savings account. During the next few years, he was able to pay for $2,000 to $3,000 in mostly car-related losses. Despite those payments, he managed to still have $4,000 in the bank that his insurance company might have had instead.

Today, the majority of the insurance companies say you should have a deductible of at least $500. But if you can afford to make it $1,000, it could save as much as 25 percent," according to the Insurance Information Institute, an industry group.

Another thing to do is make sure the policy on your house has enough liability insurance, because you never know when a person might get hurt while on your property.

Another thing to think about is getting both your home and car insurance from the same place. A lot of companies will give you a discount of five o to 15 percent if you have two or more policies from them.
You can get discounts if you install smoke detectors, deadbolt locks or burglar alarms.

Above all, make sure you keep a good credit rating, because nowadays that is a major factor when companies decide on the rates to charge.