As a homeowner, insurance is one of those things you’d rather have and not need than need and not have — plus, it’s a requirement for most mortgage lenders. However, with high interest rates and rising property taxes, you may be wondering whether you’re paying more than necessary for that peace of mind.
The good news is, there are many ways you can reduce your insurance premium without too much hassle. State Farm insurance agent Pam Hansen Alfred offers these tips to help you stretch your paycheck a little further.
Install an alarm system
Having an alarm system in your home can provide you with more than one benefit: In addition to improving your sense of security, you may also qualify for a premium discount from certain insurers.
“The more secure the system is, the better the discount,” Alfred said. “The best would be if it was sent automatically to the police or fire department.”
Systems that call a customer service center or emergency services usually charge a monthly fee. However, your discount may more than pay for that as well as improve the security of your home and family.
Raise your deductible
If you live in a relatively disaster-free area with a low chance of flood, fire, or wind damage, raising the deductible you’re willing to pay is a way to lower your premium.
“Many plans have a deductible of 1% of the dwelling amount,” Alfred said. “If you had a 1% deductible and had a $350,000 house, the claim would be $3,500. Raising your deductible to 2% will lower your premium but raise your deductible, so you have to think about what you’d be willing to pay in the event you needed to file a claim.”
Liability coverage, which is included in standard homeowners insurance policies, does not have a deductible, which means this coverage would not be impacted by your decision to raise your deductible on insurance claims.
Upgrade your roof
If you need to replace your roof, upgrading to a damage-resistant material could qualify you for a break on the cost of your premium.
“If you get a metal roof installed, that saves money in some places,” Alfred said. “Another option is an asphalt roof that is hail-resistant. This is also known as a Class 4 roof.”
A Class 4 roofing material offers the highest level of impact resistance compared to other roofing materials. In lab tests, a 2-inch steel ball is dropped multiple times from 20 feet to see if it can damage the shingles. Lower classes of materials will crack, while Class 4 shingles will not.
Lower your personal property coverage
Every home insurance policy provides coverage for both the structure and for your personal property, other than vehicles.
“Normally, your personal property is insured at a rate of 75% of the home’s value,” Alfred said. “So, if you have a house valued at $350,000, your personal property would be insured for $262,500. However, you can change the amount of your personal property to 50% or 25% for a lower premium.”
Lowering coverage can expose you to higher risk in case of a loss, which is why you should choose the level of risk you’re willing to take on to have wiggle room in your budget.
For more information on lowering your home insurance premium or to get a quote, visit pamhansenalfred.com or call 406-453-6010.
