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Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

Seven Ways to Lower Your Homeowners Insurance Costs


Homeowners everywhere are seeing higher premiums on homeowners insurance. But the good news is that there are ways to lower these costs – in some cases, by as much as 10 or 20 percent. Here are seven strategies brought to you by the New Jersey Society of Certified Public Accountants (NJSCPA).

1) Raise Your Deductible
The deductible is the amount you must pay before the insurance company begins to cover your loss. By assuming more of the risk and reducing the possibility of making small dollar claims, you can shave a significant portion from your premium. The higher your deductible, the lower your premium.

2) Insure Only Your Home – Not the Land it Sits On
A portion of your home’s market value is the value of the land itself. Even if your home were completely destroyed, its land value remains intact. It’s your home and its contents that need to be protected from fire, theft and other hazards. To determine how much homeowners insurance you need, work with your insurer or an expert in the building industry to calculate how much it would cost to rebuild your home and replace its contents.

3) Make Your Home More Safe and Secure
Insurers typically offer discounts for installing safety devices, such as smoke detectors, deadbolt locks, and burglar alarms. Some companies offer even bigger discounts for sophisticated alarm systems connected to the local police and fire departments. Another way to save is to avoid risks that drive up premium costs. For example, having a swimming pool or trampoline on your property puts you at higher risk. Ask your insurer what you can do to make your home less expensive to insure.

4) Bundle Policies with One Insurer and Remain Loyal
Many insurers offer discounts to customers who buy more than one policy from them. But before you bundle your homeowners, auto and personal liability policies with one insurer, make sure the price is lower than buying the policies from separate companies.
If you’ve had your coverage with the same insurance company for a number of years and never or seldom file a claim, ask the company for a discount based on longevity and your claims record. Many insurers offer lower premiums to customers of five or more years.

5) Ask About Other Discounts
Make sure you’re receiving any other discounts to which you’re entitled. Factors such as how close you live to a fire station or the type of material used to build your house may make you eligible for lower rates. Some companies even offer discounts to retirees, knowing that their presence at home may deter thieves and enable a quick response to fires and other emergencies. Those who live in gated communities may also qualify for discounts.

6) Review Your Policy Often
Once a year, before your insurance policy is due to renew, review its details. Call your agent to discuss any changes you’ve made to your home, such as a new alarm system, that could affect the amount you pay. You’ll also want to be sure your coverage remains adequate as building costs rise and you add new amenities and possessions.

7) Shop Around
No matter how long you’ve been with your insurer don’t assume you’re getting the lowest rate possible. Compare prices and discounts. If your employer offers homeowners insurance, a group policy may be cheaper than buying a policy on your own.
CPAs caution that price should not be your only consideration when buying insurance. You want to do business with a reputable company that’s going to pay quickly should you have to file a claim.
If you would like to speak with a CPA, you can easily locate one online using the NJSCPA Find-A-CPA service. Just go to www.findacpa.org and in a few clicks, you can locate a highly qualified professional who is right for you.

If you would like to receive more information on various financial matters, subscribe to E-CPA, the NJSCPA's free, monthly email newsletter. To subscribe, visit www.njscpa.org/finances or email a subscription request to e-cpa@njscpa.org.

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Money Management is a weekly column on personal finance distributed by the NJSCPA.

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