How to Save Money On Homeowner's Insurance

Fire, flood, earthquakes, hurricanes, falling trees, and broken water pipes are just a few of the villains that might damage or destroy your home and its contents. Then there are the thieves waiting for an opportunity to steal your valuables. That's where homeowner's insurance comes in.

Before you get a mortgage, use these strategies to find the right homeower's policy at the right price.

Comparison shop! The money you save will be your own. Policies are not identical. Costs, coverage, and conditions can vary as can the financial stability of the insurer.

Check your credit. Many homeowner insurance agencies will base your premium at least in part on your insurance score, which is a variation of your credit score. It's a good reason to make sure your credit is accurate and complete.

Basic policies don't cover earthquakes, floods, or nuclear attacks. If you live in a flood plain, call the National Flood Insurance Program (800-638-6620). It could happen to you! And if you live in California, you're going to need earthquake coverage. It's going to cost you a pretty penny, and the deductible will be high.

Knowledge is money in the bank, so don't wait until you're in a panic the day before a closing to call an insurance broker. Not only may you pay too much, you may find that you're not adequately covered when you do put in a claim.

Get quotes for the replacement value of your home and its contents, with both a $500 and a $1,000 deductible, as well as the more typical $250. The higher deductibles could shave 10% to 25% off your premium, year after year. And since even a small claim could raise your premiums or even result in a policy cancellation, you may be better off "self insuring" by stashing the money you save for an emergency.

Check with the agent who wrote your car insurance. Are you eligible for a price reduction because you're a long-time customer? Similarly, ask other agents if you'd be eligible for "a multiple policy" discount, if you let them write both your home and car insurance. You may save about 10%.

Put smoke alarms on every floor, and make sure the agent knows about them. In addition to maybe saving a life, they'll pay for themselves in a year or two, with the 2% or so that they'll save you on premiums.

Ask if there are other safety features that could save you money on the policy? Burglar alarms is one example, but there are other potential ways to save. Was your home built with fire-resistant materials? Is yours a non-smoking household? In other words, ask for all possible discounts... and then a few more. Another example: insurance on a new house built with state of the art construction should cost less. And some companies offer discounts to retirees.

You may want to pay more, for extra "floater" coverage on valuables like jewelry - if they're worth more than the standard policy limits. But if you normally keep some of your gems in a safe deposit box, be sure to ask for a break on the cost of the floater.

The biggest favor you can do yourself is to read Smarter Insurance Solutions by Janet Bramford (Bloomberg), before you take out a new policy or renew an existing one. Then, before you sign on the dotted line, take the policy home and compare what it says to what you thought you were getting... with Bramford's book by your side. By the way, her book also gives detailed advice for auto, life, health, disability, and long-term health care.

Also helpful: For a free copy of "Insurance for Your Household and Personal Possessions: Deciding How Much You Need", call the National Insurance Consumer Helpline (800-942-4242).

Check the health of your insurance company. A trip to the library will get you the latest ratings, see Best's Insurance Reports or Weiss Ratings Insurance Safety Directory, or go to www.ambest.com/resource/insdir.html.