You did it! You found your dream home, you applied for and got a mortgage, you saved and had a decent down payment, and you bought your house.
But don’t think your work as a homeowner is over. There are a lot of things you have to consider as a home owner that you’d never have to worry about as a renter.
For instance, you now have the worry of what happens if you house burns down, or if the roof gets hail damage, or what to do if someone breaks into your home. This is where homeowners insurance comes into play.
Although it’s not actually required in most states, many mortgage lenders require a borrower to have it in order to get a loan.
Home owners insurance is pricey, but there are ways you can save money and still have peace of mind. Here are 5 hacks for saving on homeowners insurance.
You are doing yourself and your wallet a disservice by not collecting multiple quotes for home insurance. Ask your neighbors, family, friends and co-workers to see who they prefer. But remember it is not always about price. If you find a company with good rates but poor customer service, or a company with very strict rules about damage and things they cover, it may not be a good fit for you. In these instances, it could be better to pay more for the right plan.
Bundle Your Insurance
If you have a good relationship with your current insurance company for car insurance or other types of insurance, you may be able to bundle your homeowners insurance under the same policy. This usually leads to a lower cost for you. Plus your customer loyalty could result in better customer service as well.
Raise the Deductible
A deductible is the minimum you have to pay out of pocket before the insurance policy kicks in. The higher the deductible the lower your premium costs and vice versa. If you can afford to raise the deductible, do so and save some of that premium cost for other expenses. This is also a good idea if you have fully-funded emergency fund that can help you cover the deductible if you ever have to file a claim with your insurance company.
Buy the Right Amount of Insurance
If you bought an expensive house or a large property, you might need to insure your home for a larger amount of money. But if you bought a small condo, you don’t necessarily need the same amount of coverage. It just depends on the price of the property you purchased. When you are buying homeowners insurance, you are looking at the rebuilding or replacement cost for your home and possessions. Be smart about the actual insurance value of your home. It is not the same as the value you paid for it as you need to make sure your valuable possessions are included on your policy too.
Reappraise Your Possessions and Home
You should be doing an annual appraisal of the value of your home and household possessions. While you might have some new things to add to your insurance, depreciation can work in your favor to help lower the amount of insurance you need if many of your possessions have depreciated over time. The TV you bought for $5,000 three years ago is probably not still worth $5,000 today. If you overvalue your items you could be paying for too much insurance.
When you are buying a house, don’t forget to factor in the monthly insurance cost if it’s not included as part of your mortgage payment and kept in an escrow account. That can dramatically affect how much home you can afford.
To save money on home owners insurance, do your research on what policies are available and find what works best for your needs and your budget. It might be something as simple as re-evaluating what coverage you really need, including the value of your home and possessions.
Have you used any of these hacks to help you save on home owners insurance? How else might you be able to save on home owners insurance?
Photo courtesy of: Meditations