Thursday, September 9, 2010

5 things you must know about homeowners insurance

1. Loyalty is overrated - check and for better deals. Consider moving your auto policy too; bundling home and auto coverage can cut your total premiums by 5% to 15%. 
2. You may have too much coverage - For now, pass on inflation protection and adjust your coverage amount to a more realistic figure.
3. A bad rep can cost you - Insurers check national databases to see what claims you've filed in the past. Those records can be full of errors.  Check your insurance report for mistakes.
4. Small claims can cost you, too - Go with the highest deductible you can afford and bank the savings to cover the cost of minor repairs. Filing a claim for every broken window or leaky pipe can drive up your premiums by 10% to 15%. Increasing your deductible from, say, $500 to $1,000 can lower your annual premium by as much as 25%, according to the Insurance Information Institute.
5. A home's history matters - In the market for a new house? It may seem unfair, but claims associated with the property before you buy it can result in your paying more than you would otherwise. "Certain locations [such as those vulnerable to flooding] may be more prone to claims," explains Kiran Rasaretnam, CFO of InsWeb.  To get info on past claims, ask for a copy of the seller's CLUE disclosure report (see No. 3). Yes, you're stuck with the history of the house you buy, but you can use what you find to negotiate a lower price with the seller.