How much coverage do you need? There are two different numbers related to your home that are important in deciding on coverage: the cash value and replacement cost. The cash value is what the house would sell for in the open market. The replacement cost is how much it would cost to rebuild the home the same or similar to how it currently exists. Policies can be purchased based on both of these numbers. Make sure you know what type of coverage you have purchased.
The land under your home is not going to be destroyed in case of a fire or disaster, so make sure you deduct the cost of the land when buying a policy. Otherwise, you’ll be paying more premium than you might need.
>As in all consumer purchases, shop around for the best prices. A good rule of thumb is to get three quotes before purchasing your policy. Ask folks you know for recommendations. I’ve found that many people have horror stories or will give kudos to their insurance company. Don’t be swayed by price alone. Ask others about pricing, service and coverages. Make sure you are comfortable with the answers you are getting on your policy, whether you are talking to an agent in person, by phone or over email.
The location of the home makes a difference. Homes that are in disaster-prone areas may have higher costs. In addition, a home’s distance from emergency services can reduce or increase costs.
Find out if there are discounts that would reduce the cost of your policy. Senior citizens have discounted rates with some companies. Some groups you belong to may net you’re a discount. Unions, AARP, even some fraternal organizations may qualify you for a discount.
Bundle your coverages. Many insurance companies reduce costs when they cover more than one type of insurance. The company I am insured with offers a 15 percent discount when it covers both my auto and home insurance. But be sure and price the policies to make sure you are getting the best price on the combined policy.
If the policy is still pricier than you would like, raise the deductible. Moving from a $500 deductible to $1,000 can result in as much as a 25 percent discount.
Improvements you make in the home could net you a lower rate. Adding a fire suppression system or a home security system can reduce your costs. Before you invest in these type of systems, though, be sure to check with your company and see if they qualify for discounts. Then weigh the cost of the system to the premium reductions to see if it is worth the investment.
Check the specific coverage your policy covers. Many policies have exclusions or limits on certain items. I was recently reviewing my policy and found that it had a limit on art, jewelry and guns. The limit was far under the value of items we own. We are investigating the cost of additional insurance for specific items. Make sure the coverage will cover the items you own.
Homeowners insurance can help you sleep better at night. But make sure you are getting all the coverage you need at the lowest price.
Roxie Rodgers Dinstel is associate director of Cooperative Extension Service, a part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture. Questions or column requests can be e-mailed to her at firstname.lastname@example.org or by calling (907)474-7201.