If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. Do not assume this discount gets you the lowest rates and shop around at least once a year.
2. Review Your Policy Limits Each Year
You want your policy to cover any major purchases or additions to your home, but you don't want to spend money for coverage you don't need. If your computer is no longer worth what you paid for it, you'll want to reduce or cancel your rider (extra insurance for items whose full value is not covered by standard homeowners policies such as expensive jewelry, high-end computers and valuable art work) and pocket the difference. Some items like jewelry might have gone up in value.
You will also want to check insurance levels on your house. Most likely the value of your home is not the same as it was last year. Generally it has gone up, but in some years it goes down. Lowering the coverage to your market value will also lower your premiums.
3. Look for Private Insurance
If you live in a high-risk area, one that is especially vulnerable to coastal storms, fires, or crime, and have been buying your homeowners insurance through a government plan, you should check with an insurance agent to see if you can get in a private plan. Market conditions change all of the time and insurers change their standards depending on the market.
4. Find Out How Much Insurance Will Be Before You Buy A House
You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home's electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it's more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5 to 15 percent.
Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, you'll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at FloodSmart.gov. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area. In California the California Earthquake Authority provides this coverage.
By getting rid of unnecessary and duplicative insurance coverage and knowing your costs going into a home purchase you can probably save several hundreds of dollars this year.
