How to Lower Your Home Insurance Costs
November 14, 2008
by Brandon Cornett
When you buy a home, your mortgage lender will require a homeowners insurance policy in order to protect their interest in the home. In most cases, the lending institution owns most of the home during the first years of the home, until the homeowner gains equity. So it only makes sense that lenders want to protect their investment in the home.
But this policy protects your investment in the home, as well. It gives you peace of mind that, in the event of a loss, you will be covered in some form or fashion. So you should make sure you get solid coverage from a reputable insurance provider.
With that being said, it sure is nice to save money wherever possible. And this goes for insurance policies as well. Here are some of the ways you can lower the overall cost you pay for a homeowners insurance policy.
Compare Insurance Companies
When you compare one provider to another, you are doing two important things at once. First, and most obvious, you are finding out who offers the lowest rates for a comparable level of coverage. Secondly, you are learning about the different types of coverage these companies provide, including the many components that make up a policy, the terminology associated with it, etc. Both of these items are important when trying to lower the cost you pay out of pocket.
Save Time by Using the Internet
The good news is that you can conduct much of the above-mentioned research fairly easily, just by using the Internet. In the past, you had to make a lot of phone calls (or even office visits) to compare insurance companies and policies. There are many big insurance websites that allow you to do this. But as always, watch out for scam websites that ask for too much personal information up front.
Another benefit to getting a home insurance quote online is the speed factor. Using the Internet, you can accomplish in a few hours what used to take a few days or even weeks.
Improve Your Credit Score
These days, in the wake of the subprime mortgage crisis of 2007 – 2008, it’s more important than ever to have a good credit score. For one thing, mortgage lenders require that borrowers have higher scores these days to get the best loan rates. But there’s another good reason to maintain good credit. Many insurance companies are beginning to use this factor when determining the price for policies.
Raise Deductible to Lower the Costs
The deductible is the money you would pay toward a loss before your insurance policy would cover the rest. If you have coverage on your car, you are probably familiar with the concept of deductibles. It’s the same basic concept with a homeowner policy.
You can lower your premium by raising your deductible amount. Many financial experts recommend doing this as a way of lowering premium costs. The logic is that you know for certain that you’ll pay the premium on your policy, but there’s only a small statistical chance of suffering a loss and having to file an actual claim. So this approach seeks to lower the amount you know you’re going to pay (the premium) by increasing the amount you may never have to pay (the deductible).
Purchasing insurance for your home can be a balance between cost and coverage. You want to control the former without sacrificing the latter. I hope this article has given you the knowledge and confidence you need to accomplish these goals.
About the Author: Brandon Cornett is the publisher of Homeowners Insurance World (a new service of the Home Buying Institute). To learn more about this important topic, or to get online quotes, visit the author’s website at HomeBuyingInstitute.com