American Dream: Affordable Home Insurance

If you are on the market for home insurance, or if you just want to verify that you have the best policy you can afford, the first thing to do is to go to the library and ask the reference librarian to show you where to find the Weiss Ratings’ Guide to Property and Casualty Insurers. The book is easy to use but expensive, and you can’t check it out. The first thing to do is look up insurance carriers licensed to do business in your state. They will be arranged by ratings. Ideally, you want to go with a top-rated company. Be aware the companies know their ratings.

Once you have selected the names of companies you think you like, look them up in the alphabetical section of the book for more detail on the company and their contact information. Take notes or think of something to do with the pocketful of dimes you have. Since insurance carriers are state-licensed, see if your state has a report on consumer complaints by company. You want to go to your state insurance commission to check.

Then, you can look up the companies on the internet and glean as much information from their websites as you possibly can. The website should reflect the company—is the site easy to navigate and understand? Can you find the information you want? This might reflect how they respond to a claim. Is there a place to ask for a quote? How detailed is the on-line form? If they ask for your Social Security number, don’t fill it out. They will need it to give you a definite quote but don’t give it to them on-line or over the phone. Once you have a pretty good idea of who you want on your short list, ask them to send you their literature. There are hundreds of insurance companies nation-wide. In no particular order, you can check out the websites of AAA, Allstate, Geico, Safeco, State Farm, AIG, Progressive, MetLife, Liberty Mutual, Mercury, Farmers, 21st Century. When you are researching them in the Weiss Ratings Guide, do be careful the company you’re writing down the contact information for is exactly the one you think it is. Notice the similarity in name between State Farm and Farmers. Don’t confuse them.

What you want to do is compare rates on the same type of policy with the same riders. Otherwise, you’re comparing apples with oranges. When you’ve selected the company you want to do business with, there are several ways to get better rates on your policy:

a. Raise the deductible (your out-of-pocket expenses) that you are required to pay before the company reimburses you for any claim. If a standard deductible is $500 raise it to $1000. Be sure you maintain that amount in an accessible savings vehicle in case you need it. There may be separate deductible amounts for specifically named hazards. Read your policy.

b. Don’t over-insure. If you have a house on land, the price you paid included the price of the land. If you have an orchard or timber, or a landscape-architect designed garden, yes, you should probably insure against hazards that could cause expensive damage. But if all you have is grass, there is no need to insure it at the same rates that you insure your furnishings and structure.

c. Most insurers will cut a deal if you get your home and auto insurance from the same company. But do the math.

d. Safety features can cut your premiums. Fire extinguishers should be in the kitchen and garage, smoke alarms in strategic places. Do you have fire ladders upstairs. Would storm shutters be wise? Is your roofing material fire-resistant? There are many steps you might be able to take to lower the risks and therefore the cost of insuring your home.

e. Before you install a security system, find out if your insurer recommends any specific one.

f. Ask if there are discounts for non-smokers, for 55 or older, or for anything else you come across in your research. Your agent probably isn’t going to suggest ways for him to make less money. You need to ask. Also, if you belong to a service organization, a church, a professional organization, find out if there is a program associated with that group that would allow you to buy cheaper insurance.

g. Keep your credit rating healthy. Get a free credit report at least once a year so you know where you stand.

h. Once you’ve signed with a company, stick with them as long as you’re getting a good rate. The longer you stick with them, the better discounts you will get over the years.

Do your homework. Review your coverage needs and your policy annually. Your policy needs to be revisited if you remodel your home, if you make security/safety alterations, if a valuable item you’ve insured separately depreciates in value. Do price comparisons every year, too. And don’t forget your birthday. As you get older you may qualify for more discounts.

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