How to Get More Out of Your Home Insurance Policy
If you own a home, you probably already have a home insurance policy in place.
If you bought the house with a mortgage, your bank likely required you to have
an active (or soon to be active) policy before lending you the money. Even if you
bought the house in cash, you likely realized that home
insurance was a wise investment.
But home insurance should do more than just afford you
basic coverage. How can you get the most value out of
your home insurance policy? And what changes can you
make to an existing policy to get there?
See Your Insurance as an Exchange of Value
First, learn to see your home insurance policy as an exchange of value. This isn't
just something that your bank requires, nor does home insurance look identical
for all homeowners. You're going to pay a monthly premium for your home
insurance, so it's your responsibility to make sure you're getting your money's
worth.
There are only two ways to tilt the value exchange in your favor. You can either
reduce what you're paying or increase the value you get from your policy. We'll
be looking at strategies that do at least one of these things, and sometimes both.
Take the Time to Shop and Compare
One of the biggest mistakes made by homeowners is choosing an insurance
provider and accepting whatever generic home insurance policy they give you. If
you want to get the most value out of your policy, it's important to shop around
with many different providers and see exactly what types of home insurance they
can offer.
Sometimes, you can get a cheaper rate just by switching to a new provider. Your
home insurance policy may be functionally identical, but for one reason or
another, you can score a lower rate. Of course, at the same time, it's important to
review those policies carefully; just because a policy is cheaper doesn't mean it's
better.
Become an Insurance Expert (Kind of)
If you want to dig deeper into the mechanics of home insurance, you need to
become your own kind of insurance expert. That doesn't mean you need to get
licensed or hold a job in the insurance industry, but it does mean you should be
familiar with the most common industrial terminology. If you don't know the
difference between a premium and a deductible, you're not going to be in a
position where you can maximize the value of your insurance policy.
Review an insurance glossary so you understand all the jargon, and become
familiar with all the common practices of the home insurance industry. The more
educated you are in this field, the better decisions you'll be able to make as a
consumer.
Push for Discounts
Don't hesitate to ask your insurance carrier for discounts for which you might
qualify. Sometimes, you can pay a lower premium just because you asked.
These are some common discounts you might be able to score:
· Bundles. Insurance providers make more money if you have multiple
policies with them, so they're typically willing to incentivize you to bundle policies.
You might pay less for home insurance if you also have a car insurance policy
with this organization.
· Upgrades. Making certain upgrades to your home can make it more
affordable to insure. For example, if your home has an antiquated electrical
system, upgrading that system could reduce your fire risk, and thus reduce your
insurance costs.
· Security. Many insurance companies provide you a discount if you have an
active security system in your home.
· Loyalty. If you've been with this insurer for many years, you may be able to
score a loyalty discount as well.
Consider Increasing Your Deductible (and Saving an Emergency Fund)
You'll typically pay a lower premium if you have a higher deductible. Your
deductible is an amount of money you'll be responsible for paying if you make a
claim, so it's important to raise this deductible with care. Consider saving up an
emergency fund so you can cover the deductible if necessary.
Avoid Making Claims
The more claims you make, the more your premiums are going to increase.
Avoid making claims for small instances of damage; it's usually better to cover
these costs yourself.
Review Your Policy Regularly
As you grow, your needs will change – and your insurance policy should change
with them. Take the time to review your home insurance policy regularly and
update it as needed.
Home insurance can be complicated, but it doesn't have to be. It also doesn't
have to be a financial burden. With these tips and strategies, you can get more
coverage for less money – and rest easy knowing you have superior protection