Thursday, August 11, 2011

INSURANCE: Cut Home Owners Insurance Bill by Using Discounts

Home owners often think the only ways to save money on home insurance is to put up smoke detectors and insure cars with the home insurance company. But property and casualty companies offer a variety of other discounts, says, some for as much as 25% for obscure improvements.

Gated community: Home insurers have the same peace of mind you do when you live in a gated community — knowing there’s a layer of security between you and the criminals. Some are willing to credit you for lessening their risk — by up to 20%. Gated communities are a lot less attractive to thieves than those outside the compound. Where you live always affects the rates you pay — some parts of town statistically pose more risk than others for vandalism, burglary, and theft.

New wiring: Older homes with turn-of-the-century “knob and tube wiring” are more likely to catch fire and be expensive to insure than new homes with modern, up-to-code wiring. The U.S. Fire Administration says home electrical problems cause 67,800 home fires, 485 deaths, and $868 million in property damage annually. It estimates “home wiring” causes twice as many fires as electrical appliances. Qualify for a new wiring discount (10%) for your older home by hiring a licensed electrical contractor to “bring it up to code” (the National Electrical Code, 2005, adopted by Tulsa in 2006).

Impact-resistant roofing: Insurance companies worry most about roof quality. We have tornadoes and high winds, occasionally, but it hails every year here and sometimes it’s the big stuff. As more and more impact-resistant roofing materials become available, insurers are offering rate discounts (10%) to home owners as incentives to buy “impact resistant roofing” — “UL 2218, Class 4 rating” (most hail resistant). See “Products Qualifying for Impact Resistant Roofing Credits” in Texas at No such list is available for Oklahoma.

New home or renovation: Unlike new cars, new homes, or homes recently renovated cost less to insure than older homes. “New pipes don’t leak, new furnaces don’t catch fire, new electrical panels and wiring don’t cause fires, and new roofs, chimneys, and foundations don’t lead to costly claims,” says

When buying a new or even an existing home, an EMP inspection will have been done by a professional who has detected — and the seller has fixed — all electrical, mechanical, and plumbing issues. With renovation, check your insurance agent first for suggestions on how to address likely issues to maximize insurance savings (up to 25%).

Nonsmokers: Where there’s smoke, there’s fire, and the USFA says 18,900 smoking-related home fires killed 595, injured 1,200 and caused $327 million in property damage in 2007. Insurers offer nonsmokers a 15% discount on home insurance.

Mature insured: The retired spend more time at home — detecting gas leaks, pipe breaks, smoking electrical panels, etc. — before real damage is done. Insurers offer the 55+ up to 25% cheaper insurance, just for being there.

Insurance rates affected by number of claims filed Home owners often think of insurance policies as home maintenance plans, which can lead to non-renewal of policies, said David Vaughan, owner of Vaughan Insurance Group. “Small claims paid in the past often lead to higher premiums in the future,” he said.

Insurance policies are written to protect home owners from catastrophic loss — total destruction or devastating home fire, significant tornado damage, roof destruction by hail, etc. — and not every little problem that comes along, such as single window breakage or replacement of older roofs due to hail damage.

Claims-free credit: Many home insurance companies offer deductions for long periods of no claims being filed. No claims is good news. Auto insurance companies offer good-driver discounts and home insurers now offer claims-free credits. Fewer claims keeps more money in insurers’ pockets and they’re willing to pass some of that on to customers by shaving premiums (up to 20%).

More companies are trying to reward longevity. Even if customers have had single claims, they might still qualify for long-term customer discounts upon renewal if they’ve been insured for long periods claims-free.

New ratings models: Home insurance is a changeable business, as real estate is a dynamic market.

Actuarial experts crunch the numbers, as home values fluctuate and construction costs vary, to develop models helping insurance companies manage risk.

As home owners’ insurance rates naturally flow from these models, it follows that rates can change as well — sometimes in customers’ favor, said In some cases, new models are used to establish lower rates to attract new customers.

Many insurance companies use tiered rating now, and if customers don’t quite fit into perfect molds because of something they left on their credit reports, they could be paying more than necessary until they clear these up.

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