Common Home Insurance Tips from Professionals

You are required by law to carry a degree of home insurance in all 50 states. Each property must have property and liability coverage; property protects you from damages to your own home, and liability protects you from damage you do to others. Home insurance is one of the least understood elements of home ownership. Many people complain about their home insurance premiums, but they do little to reduce them or understand them. Even if you are not an insurance professional, you can reduce your premium with a few tips.

Determine Your Ability to Pay

Many people neglect to determine how much they can afford to pay in both insurance and claims before they elect a policy. When you allow an insurance company to direct you through the process, instead of directing them, you will end up with a higher premium. By preparing a budget that accounts for both premium and unknown hazards, you can determine what costs you are looking for before seeking a policy.

Start by considering how much you can reasonably afford to pay out in the case of a single claim. If you have a high income and high savings, you may be able to take on several thousands of dollars in claims yourself. Also decide how much you can afford to pay in one year, and then in the case of a catastrophic event. Next, determine how much, ideally, you would pay each month in insurance premiums. Write each of these numbers down before you negotiate a contract.

Adjust Your Deductible Accordingly

The amount you can reasonably afford to pay on a single claim will become your ideal per occurrence deductible. The amount you can pay each year should be your ideal yearly deductible. The amount you can afford to pay in a catastrophe should be subtracted from the value of your home to determine your limits. 

It may seem unreasonable to agree to pay high deductibles when your insurance could potentially cover the claim. The truth is, though, even though you may have a costly claim or a costly year, you will save money over the life of your policy with this method. You should only opt for a low deductible if you cannot afford to pay the claim on your own. 

Do Not File Payable Claims

People often make the mistake of filing every claim their insurance will cover. When you do this, your premiums go up each year. Essentially, you will be paying for the claims yourself in a higher premium. You may feel like your insurance is paying, but the money is truly coming straight out of the dollars you have given the company.

Insurance is necessary for two reasons: to meet legal requirements and to pay for claims you cannot afford to pay for yourself. If you think of it this way, you will always be a prudent insurance shopper. You will be balancing the coverage you elect with your own budget and financial considerations to build a stronger personal conception of loss prevention.

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