We are all looking for ways to save on the cost of homeowners insurance without sacrificing quality. In this blog, I would like to suggest a number of ways to reduce your homeowners’ insurance premium. In each case, you will be building a policy that fits your specific needs and avoids waste and duplication.
- Be Sure your Home Is Properly Insured for Replacement Cost, not Market Value – Don’t confuse the market value of your home, which includes the value of your land, with the replacement value. Your land is not covered for fire, windstorm, vandalism, etc. so you are wasting your money if you try to insure these things. You are looking for what it would cost to replace the home itself with a new home if you had to rebuild. A cost estimator can help determine this replacement value.
- Raise Your Deductible – The deductible is the amount of money you will pay out of pocket in the event of a loss. At our agency, we believe that it is cost effective to maintain a relatively high deductible. Through the years, you will save a considerable amount of money by maintaining a high deductible, even if the savings in one year is minimal. Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the coast in the East, you may have a separate windstorm deductible.
- Make your Home more Disaster-Resistant – By making your home more resistant to loss, you can save significant premium dollars. Consider adding storm shutters or impact glass. Reinforce your roof. Consider renovating your plumbing, heating, and electrical systems to reduce the possibility of fire or water damage.
- Improve your Home Security – Burglar and fire alarms are not cheap, but can give you significant discounts on your homeowners insurance. Purchase systems that ring at the local police or fire station. If you were to have a house fire or if you were to be visited by a burglar, you will be very glad that you made investments in quality alarm systems.
- Maintain a Good Credit Score – Establishing an excellent credit history can cut the cost of your homeowners and automobile insurance. Insurance companies are relying more and more on credit scores to price their policies and decide whether or not to accept a new customer. Be sure to pay your bills on time, only purchase the credit you need, and keep your credit balance as low as possible to improve your credit score. It is wise to check your credit score regularly.
- Review your Coverages Every Year – During the year, you may decide to add or sell items of value—like jewelry or furs—and can then add or delete them from your scheduled items (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). This can save you money and fine tune youe homeowners policy.
- Don’t Forget About the Cost of Homeowners Insurance When Purchasing a Home – If you are buying an older home, you will save money if the electrical, plumbing, and heating systems are up to date and if the construction is up to code. If you buy in a flood-prone area, remember the extra cost of flood insurnace. Flood damage is NOT covered by a homeowners policy. If you are in area prone to wind damage, a concrete block home is preferred over a frame home. Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems the house may have.
John Gracey Backer, CPA
John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at firstname.lastname@example.org
Auto insurer actuaries are able to amass a vast amount of statistical data to accurately predict a person’s propensity for having an automobile loss—and they set rates accordingly. Risk profiling is employed by all the automobile insruance companies, and is the one area where the consumer has some control—to improve their risk profile and lower their automobile insurance premiums over their lifetime. The premium charged can vary depending on many factors that are anticipated to affect the cost of future claims.
Examples of factors are:
- • Characteristics of the automobile – Age, manufacturer, value, safety features (anti-lock brakes, anti-theft devices, adaptive cruise control, lane departure feature) all matter to insurance companies.
- • The coverage selected – Liability limits, uninsured motorist, collision, comprehensive coverages vary significantly depending on your willingness to take on more risk.
- • Deductible you select – Higher deductibles mean that the driver pays more to repair his vehicle before the insurance kicks in, thus reducing your premium.
- • Profile of the driver – Age, gender, marital status, place of residence, driving record all help determine your ultimate premium.
- • Usage of the car – Do you commute to work, use your vehicle for business or pleasure only?
Before the dawn of advanced technology, determining an auto rate was fairly simple: look at the prospect’s age, driving record, location and type of vehicle. Today, because of advances in data technology, automobile insurance companies can pinpoint more exactly how much to charge based on our individual risk profile. The following are individual risk factors that will determine if you are charged more or less money by your auto insurance company:
- Credit Rating – Study after study indicates that a person’s credit rating can determine their propensity to have an accident. The best automobile insurance companies insure drivers with the best credit scores.
- Payment History – Similar to your credit history, if you pay your automobile premiums on time, you may be able to reduce your premium.
- Age – Around 30% of all vehicle injuries in the U.S. are caused by drivers aged 15-24. Those in the 16-19 group are three times as likely as those over age 20 to be in a fatal car crash. Motor vehicle accidents are the leading cause of death for teenagers in the country. For this reason, drivers age 16-19 pay 50% more on average for automobile insurance than drivers aged 20-24. As drivers age, their rates typically decline until, by age 55, drivers can enjoy senior discounts.
- Driving Record – Driving history has shown to be an accurate indicator of future claims. Drivers with a clean driving record enjoy discounts not granted to those with tickets or accidents.
- Gender – Men, especially young ones, are much more likely to be involved in automobile accidents than women, regardless of their age. For this reason, men pay significantly more for their automobile insurance over the years than women.
- Nature of Employment – Drivers who use their cars for business, like real estate salespeople, pay higher rates than drivers who work from home. While it is difficult to quantify, drivers who work in high stress jobs for long hours, like doctors, tend to have more accidents than those in low stress occupations.
- Vehicle type – Cars that are more expensive to repair or which are most likely to be stolen carry higher rates than others. Some high performance automobiles are very difficult and expensive to insure. Cars with extra safety features may be subject to additional credits.
- Location of your home – Drivers who live in high risk urban areas of the country and those who live in high-crime neighborhoods where their vehicles are more likely to be stolen or vandalized, pay higher rates than others.
- Marital Status – Married people tend to be better drivers than singles and pay lower premiums. In many cases, the multi-car discount kicks in, thus reducing your premium.
Armed with this information, there are many ways you can reduce your automobile insurance rates by improving your risk profile. There are no quick-fix solutions but rather improving your risk profile is a long-term operation.
Talk with us to understand the wide array of options for automobile insurance. You are very likely subject to credits about which you were unaware. We represent many different insurance companies and can design a custom-made automobile insurance policy to fit your specific needs.
Barbara Gracey Backer
Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at email@example.com