Thursday, May 22, 2008

Saving On Home Insurance

Here are some tips:

The first thing you can ask your auto or home insurance agent about is raising your deductible - the amount of money you are responsible for when you file a claim. That may knock off money from your premium.

It might not make much of a difference when it comes to your car, but you can save some bucks when it comes to your home.

"Some companies where you change $1,000 deductible to $2,500 - it's a $400 savings a year. Others, maybe it's $20," said Connie Galewski, an independent agent with Avalon Insurance Group.

Galewski deals with a lot of insurance companies. She warns the most important thing to know when it comes to raising your deductible is to make sure you are able to cover it in case disaster strikes.

Another way that can save you some money is free and it's offered by the state government. My Safe Florida's free home inspections isn't a new idea, but it is one that hasn't been taken advantage by many people who own single family homes.

"A lot of people really don't know about this," said Galewski. "On my own home, I saved about $700."

Once you go to the website and fill out an application, an inspector will come out to your home.

"They'll make a time to come out to your home and it takes about a half-hour. And it can definitely save you money," said Galewski.

Lastly, shop around - especially if you haven't done it in a while. A lot more insurance companies are coming into Florida since so many left after Hurricane Charley in 2004.

"You definitely need to shop around because there are all kinds of rates out there," said Galewski.

From CNNMoney:

1. Be prepared

The National Association of Insurance Commissioners (NAIC) found that nearly half of people - 48% - said they did not have an inventory of their possessions. And almost 60% of people didn't have receipts that showed the cost of their items.

About 28% did not know which type of coverage they purchased, whether it was an actual cash value or replacement cost. The NAIC said 69% of folks didn't have earthquake insurance, and 65% did not have flood insurance.

2. Get the Lingo

There is a world of difference between actual cash value and replacement cost. Remember, actual cash value is the amount it would take to repair or replace damage to a home and its contents AFTER depreciation. So if you bought a flat screen TV at $3,000 five years ago, you may get a check for what it's worth today and that could be as low as $500 if you have actual cash value insurance.

Replacement cost is the amount it would take to replace or rebuild a home or repair damages. An actual cash value payout could be thousands of dollars lower than a benefit calculated at the replacement cost according to the NAIC.

3. Know your coverage

In this case, wildfires are a covered peril in most homeowner's insurance policies. But make sure you get the details. Insurance companies have been avoiding risk and cutting back on their insurance coverage for years.

Flood insurance and earthquake insurance must be purchased separately from your homeowners policy. Standard policies also don't cover damage from sewage and water backups.

And keep in mind, homeowners policies typically cover only $1,000 to $2,000 for theft of jewelry, furs or other precious items. So, if you have expensive items, you may consider buying extra insurance.

4. Consider Inflation

Inflation doesn't just hit your groceries. The materials needed to rebuild your home are also vulnerable to inflation. Your homeowner's policy may not account for this.

To protect yourself, ask for an inflation guard with your policy. This lets the insurance company to automatically increase the policy limits to keep pace with inflation. Now, you will have a higher premium, but if you have to rebuild your home, you'll be glad you have this protection.