Following the housing boom of the early 2000s, the number of home insurance providers across the United States skyrocketed. Rather than simplify the process of selecting an insurance provider, the boom instead added numerous layers of complexity to what was already a difficult procedure. In many cases, individuals seeking new coverage are often forced to endure long and arduous evaluation procedures before they receive approximate quotes.
As if that weren’t enough, there are occasions where certain companies are less than transparent about the coverage and premiums associated with their policies. While there are tools in place to monitor insurance providers and make complaints in the event of difficulties, those tools do little to save money on premiums. Fortunately there a few simple things homeowners can do to save thousands on their home insurance premiums.
Select a Higher Deductible
Few homeowners are capable of differentiating between sound home insurance policy choices and marketing tricks. For example, a home insurance premium with a low deductible can cost hundreds of dollars more per year, while a policy with a higher deductible will cost significantly less, but carries the specter of paying out of pocket for home repairs. Since most home repairs are minor and don’t exceed a few hundred dollars, low deductibles are always in favor of insurance companies, and not consumers. That is why insurance carriers usually try to sell policies with lower deductibles.
Insurance marketing makes it appear that devastating home damage is always just around the corner. News and media help to support this by misrepresenting numbers to generate publicity. While factually accurate, these stories sidestep the truth to a degree, implying significantly greater risk to homeowners than statistics support. For example, Hurricane Katrina, the most devastating storm in U.S. history, damaged about 1.2 million homes, with about 10% of those being “severely damaged or destroyed.” Likewise, the National Fire Protection Association reported that in 2011 about 370,000 homes were damaged by fire, inclusive of wildfires. While these numbers seem big, they barely exceed one percent of all 115 million residential homes in America, according to the 2011 census. That means the risk of a major disaster for a homeowner is, on average, very small. Homeowners could save significantly simply by selecting a higher deductible.
The money saved, if placed in a high-yield FDIC account, would more than make up the difference of a lower deductible in almost every case. Knowing this makes it easier to narrow down policy selections and compare coverage costs, leaving the only real decision to be where to invest the savings to return the maximum benefit.
Use an Online Comparison Tool
Overselling things like unnecessary deductibles is just one tool in the insurance salesperson’s arsenal. Another is leveraging the knowledge that most consumers are probably not fully aware of the agent’s competitors and rates. In every case the insurance agent is very aware of these things. Informed consumers should be too, not only to get the best deal, but also to be aware of their options.
Thankfully the Internet has given rise to a number of effective tools that allow for quick access to quotes from a number of providers. One such tool is Insured 101 Home Insurance, where in a matter of seconds homeowners can input their zip code and receive a list of insurance providers in their area. The greatest benefit of this is the time saved, as it allows quick and easy research from a single location. Companies represented include Liberty Mutual, Progressive, Transamerica and others.
Locate a Trustworthy Independent Agent
I stress online tools, consumer research, and fiscally responsible insurance deductibles, but the value of good insurance agents should also not be overlooked. They have knowledge and industry experience that can assist in determining the best match once home insurance carriers have been narrowed down. Additionally they may be able to provide discounts or special pricing based on the relationships they maintain. For that reason they are an asset to the informed consumer, helping to make better and more knowledgeable decisions when selecting policies.
With these things in mind, while many insurance agents do tend to push lower deductibles, creating an atmosphere where the most knowledgeable consumers are able to capitalize on the best deals, the average homeowner can still save money simply by following the above three tips. Knowing what the competition offers can make negotiating a lower rate with your existing provider much easier. Besides, if they still say no, you’ll already be prepared to switch companies.Powered by Sidelines