March 30th, 2015
Buying a new home can be one the most exciting times of your life, up there with a wedding day or having a baby. It's a time-consuming process that involves plenty of legwork and paperwork. After getting the requisite approvals and making the necessary signatures, the first thing you should start thinking about is insuring your new homestead. Most mortgage providers require some form of home insurance, but chances are it's a basic policy that doesn't cover all of the potential pitfalls that can trap new homeowners.
Here are seven helpful tips for maximizing your homeowners insurance:
1. Know your home's value
Even though you might have just purchased the house, you could have paid more or less than the market value. Fox Business suggested checking with a local builder or assessor to establish the most accurate value of your home. You don't want to insure a home for less than it's worth nor do you want to pay higher premiums for an overvalued house. As PropertyCasualty360 pointed out though, don't confuse your house's market value with its replacement cost, since the rates for covering the market value might mean you're overpaying.
2. Understand what's covered
Mother nature has a consistent tendency to wreak havoc on homes, which is why many natural disasters are not covered. Standard policies typically have exclusions for landslides, earthquakes, sinkholes and ground flooding, and although windstorms are not generally excluded, damages from tornadoes or hurricanes in high-risk areas might not be covered.
3. Compare and contrast companies
One company might have great coverage but horrible agents, while its rival company can have high premiums but great agents. For some people, this can make a world of difference. You will be dealing with the agent during any claims process, and sometimes this process can take a considerable amount of time. Because of this, it can be preferable to seek out agents that have good online reviews or come with a strong recommendation from a trusted source.
4. Be safe
In some instances, installing a burglar alarm that connects to a central hub or the local police department can help lower your premiums by as much as 15-20 percent. Even adding a simple deadbolt can see your rates drop by five percent. Adding smoke detectors to older houses that previously did not have them could also potentially save you up to 10 percent in annual premiums. Conversely, adding a pool or trampoline can increase your annual homeowners insurance costs by as much as 10 percent or more, according to Forbes. In some instances, adding a fence around the pool can help alleviate the hike in rates.
5. Bundle your policies
Look into whether your insurance companies provide a discount if you bundle other types of insurance such as auto or health into your homeowners policy. You might be surprised to find out that not only do they bundle policies, but they also reward you with a discount of 10 percent or more off your premiums.
6. Make wise additions
If you are considering an addition to your home, use safer materials like cement or steel-framed structures since these are more durable and less likely to get burned down. On the other hand wood-framed structures are more susceptible to fires, so insurance companies charge more to insure .
7. Pay off your mortgage
This is probably the tip all homeowners will be acting on regardless of whether they want to lower their premiums simply because nobody enjoys paying their mortgage. But the truth of the matter is insurance companies will likely reduce your rates if you own your home. The conventional wisdom indicates you are more likely to keep up with maintenance and repairs on your home if you own it, which lessens the chance of you needing to file a claim.
CoverHound provides quick and easy access to homeowners insurance through their user-friendly website.