Important Considerations for all Homeowners/Renters
Consumers should understand the major factors that affect their
homeowner’s/renters insurance costs:
- Where a consumer lives makes a big difference in the cost of
coverage. People in states prone to hurricanes, high winds and/or hail
typically pay higher premiums for homeowner’s insurance, as those risk
factors have a big impact on insurance costs. According to the most
recent National Association of Insurance Commissioners (NAIC) data, in
2003 the average cost to insure a home was $668.
- Many consumers are not aware that they have the option to insure
their home and belongings for either the replacement cost or the actual
cash value. Actual cash value is the amount it would take to repair a
home or replace damaged possessions after factoring in depreciation.
Replacement cost is the amount it would take to repair a home with
materials of similar kind and quality, or to purchase new possessions
without deducting for depreciation. Understandably, insuring property to
cover replacement costs is more expensive than insuring it for its
actual cash value, but may be worth the difference if a consumer can
afford the higher premiums.
- Another simple tip that can save consumers time and aggravation if
they ever need to file a claim: make an inventory of personal belongings
and save receipts for major items, along with a photograph or video of
each room. This documentation should be stored in a safe place outside
the home, such as a safe deposit box, in case the dwelling is destroyed.
- As many consumers learned from last year’s violent hurricane season,
damage to a home or belongings caused by flooding is NOT typically
included in a homeowner’s policy. Consumers who live in areas prone to
flooding should inquire about flood insurance through the federal
government’s National Flood Insurance Program (NFIP).
- People who own expensive valuables—like jewelry, antiques or
art—will probably want to purchase an endorsement to their homeowner’s
policy, as these types of valuables are typically not covered by basic
Tips to Help Consumers Lower their Homeowner’s or Renter’s Premiums
Many factors that affect insurance costs are within the control of
- Shop around and compare the costs of comparable coverage from
different insurers to get the best value.
- Install smoke detectors in key locations; keep fire extinguishers
handy, especially in the kitchen.
- Install dead-bolt locks and a burglar alarm system, particularly one
that directly contact the police or fire department or an external
- Keep up a solid credit history, as many insurance companies offer
better rates to individuals with good credit ratings.
- If you can absorb the higher out of pocket expenses in the event of
a loss, select a policy with a higher deductible (the amount not
reimbursed by your insurance); the higher the deductible, the lower the
- Consolidate homeowner’s and auto policies with the same insurer to
qualify for a multi-policy discount.
Homeowner’s/Renter’s Insurance Tips for Different Life Stages
different life stages, consumers’ homeowner’s/ renter’s insurance needs are
likely to change. For example:
- Young singles who typically rent
rather than own and may have one or more unrelated roommates, should
know that each leaseholder needs his/her own individual renter’s policy
to protect his/her own possessions and against liability for accidents
that happen on their premises.
families who may be buying their first home should know that in most
instances it only makes sense to insure their home itself and
belongings—not the land on which the home sits. Also if they install a
swing set or trampoline for their kids, they should consider additional
umbrella liability insurance to cover them in the event a visiting child
is injured while on their property.
families that may be remodeling or building an addition to their
home should update their homeowner’s policy to reflect these
enhancements, particularly if they add $5,000 or more to the value of
- Seniors should ask if they are eligible
for discounts. And if they’ve just paid off their mortgage—and their
homeowner’s insurance was previously paid through their mortgage
company—they need to alert their insurance company to send the premium
bills directly to them and to pay on time so that their homeowner’s
policy doesn’t laps