How Much is Too Much?
Last spring the nonprofit consumer group, Washington Consumers’ Checkbook, gathered sample premiums from the Maryland/DC/Virginia area’s largest homeowners insurance providers. After grouping the findings by area and type of home – for example, a typical frame house in Montgomery County – Checkbook found major disparities in policy premiums within each group. With some agencies charging more than twice as much for the same homeowners policy, some consumers could be needlessly throwing away thousands of dollars each month.
Checkbook notes that there are “enormous opportunities for area homeowners to save,” because competition is almost non-existent among the several large companies writing the majority of policies in and around Maryland. So, what to do? First and foremost, do some comparison shopping. Use a service such as Insurance Direct 123 to connect with independent agents in your area who can shop and compare literally hundreds of companies. Finding a more affordable policy will of course make it easier on the wallet, but Checkbook offers additional tips on how to reduce your premium even after changing your insurer.
Keep Your Homeowners Policy Up To Date
Do you know how much it would cost to rebuild your house? The answer to that question is really the baseline for how much homeowners insurance you should carry. If you are unsure of your home’s replacement cost, you could be paying too much – or too little – for your coverage. Checkbook recommends re-estimating your home’s replacement cost every few years and adjusting your policy accordingly. Bottom line: Do not pay for insurance you can’t use.
Reconsider Your Deductible
Insurance protects you from losses that you cannot afford to replace on your own. With that in mind, take a long, hard look at your current deductible, and consider increasing it. Remember the higher your deductible, the more money you save on your premium. Also, a higher deductible will limit the number of claims you can make. Generally, filing a claim will result in a higher premium and might cause an insurer to drop you. So, taking care of the little things yourself can prove to be more cost effective. Run the numbers and determine how much of a loss you can sustain on your own and adjust your deductibles accordingly.
An easy way to save money on insurance is to consider buying your homeowners and auto insurance from the same agency. Most insurance companies will gladly offer a “bundling” discount for multiple policies.
Remember – if you find a policy that is a better fit for you, go for it. You do not have to wait until your current policy term ends to change companies.