ways to save on homeowners insurance

Homeowners insurance premiums are expected to rise 8 percent in 2004, according to the Insurance Information Institute-on top of 2003’s 7 percent increase. More prevalent storms, hurricanes, floods, and wildfires are the biggest culprits behind the increase. Blame mold claims and stock market losses by insurance companies, as well. To obtain insurance at a good rate:

1. Review the Comprehensive Loss Underwriting Exchange (CLUE) report on the property you’re interested in. CLUE details the property’s claims history for the most recent five years, which insurers may use to deny coverage. Make the sale contingent on an home inspection to ensure that problems identified in the CLUE have been repaired.

2. Seek insurance coverage as soon as your offer is approved. You must obtain insurance to buy. And you don’t want to be told at closing that the insurer has denied your coverage.

3. Maintain good credit. Increasingly, insurers are using credit-based insurance scores to determine premiums.

4. Buy your homeowners and auto policies from the same company and you’ll usually qualify for savings. But make sure the discount really yields the lowest price.

5. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.

6. Seek group discounts. If you belong to any groups, such as associations or alumni organizations, they may have deals on insurance coverage.

7. Investigate a government-backed insurance plan. In some high-risk areas, federal or state government may back plans to lower rates. Ask your agent.

If you already have an insurance policy:

  • Review your policy limits and the value of your possessions annually. Some items depreciate and may not need as much coverage.
  • Insure your house for replacement cost, not market value. Beware: Many insurance companies are eliminating guaranteed full-replacement costs for homes.
  • You can usually obtain discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks.
  • Retrofit your house to protect against natural disasters common to your area.
  • Raise your deductible. Avoid making claims under $1,000.