Homeowners insurance protects your home and your possessions in the event of an emergency, such as fire, storm damage or theft, and covers the costs of medical care and potential lawsuits if someone is injured on your property, making it a must-have for folks who own a home. In fact, most lenders won't let you complete a closing without proof of homeowners insurance. But like all insurance, homeowners policies can be tough for newbies to navigate. A little helpful information can help you get the coverage you need at the best price.
Know Your Reputation
Your credit report matters, but so does your insurance claim record -- and the official record may have errors that end up costing you money, according to Doug Heller, executive director of Consumer Watchdog, an insurance advocacy group, on CNN Money. You can check your claims record at choicetrust.com for a small fee so that you can spot and correct any errors before shopping for homeowners insurance. While you're at it, check the claim record associated with your house -- you can request the Comprehensive Loss Underwriting Exchange report on your new home as part of the seller's disclosure. Houses with a high claim history may cost more to insure, and while you can't change that, you can use it in the buying negotiation process, says Kiran Rasaretnam, CFO of InsWeb, on CNN Money.
Do Some Legwork
It may be easier to call one or two insurance companies, but the more plans you compare, the more likely you are to get a really good deal, says Shaun Irwin, owner of the independent Anderson Agency in Minneapolis, in the Star Tribune. Get specific about what's covered and what you will pay, and you'll find that coverage and costs can vary significantly.
Maximize Your Deductible
Though it increases your out-of-pocket costs when your home is damaged, a high deductible can lower your monthly insurance costs and save you money on your homeowners insurance in the long run, says Don Griffin, a vice president at Property Casualty Insurers Association of America, on CNN Money. Griffin recommends setting aside your savings from the higher deductible -- which can be as much as 25 percent of the total policy cost -- and using that cash for minor repairs and problems, which can significantly increase the cost of your insurance over time.
Find Your Discounts
There are a lot of homeowners discounts available, but companies may not tell you about them unless you ask. You can get discounts for everything from home improvements to alarm systems and new deadbolt locks to quitting smoking and carrying multiple policies with the insurance company, so ask what discounts you qualify for. Discounts can save you as much as 10 percent on your homeowners insurance, says Irwin.
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