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12 tips for saving on your homeowners insurance
Wednesday, November 12, 2008 • Posted November 11, 2008 10:00 PM

The Texas Department of Insurance recently launched a new effort to get Farmers Insurance Group and State Farm to lower their home insurance rates. The department is seeking $300 million in premium refunds, plus 10 percent interest.

This ongoing debate serves to remind us that insurance, while a necessary fact of life for homeowners, can get expensive. But there are ways we can take control to save money and trim costs so premiums don't go through the roof (pardon the pun!).

For example, most of us pay our car and homeowners insurance premiums automatically, rarely comparing rates or providers. But with insurance costs at more than $2,000 a year on average, even a savings of 10 percent or 15 percent can save us a big chunk of change over the long haul.

This year, after the food frenzy of Thanksgiving ends and before the holiday hustle and bustle begins, take some time to shop around for the best deal on your homeowners insurance. The Insurance Information Institute offers "12 ways to save" on insurance. Consider these tips when you're making comparisons.

1. Shop around

It will likely take some time, but simply comparing insurers and rates could save you money. The insurer you select should offer both a fair price and excellent service. Talk to a few different insurers to get an idea of the type of service they give. Ask them what they can do to lower your costs.

2. Raise your deductible

Deductibles are the amount of money you have to pay toward a loss before your insurance company pays. Deductibles on homeowner's policies usually start around $250, but by increasing your deductible to $500, you could save up to 12%. Here are some general guidelines for how much you can save by increasing the deductible amount:

$ 500 – Save up to 12 percent

$1,000 – Save up to 24 percent

$2,500 – Save up to 30 percent

$5,000 – Save up to 37 percent

3. Get your home and auto policies from the same company

Many large insurers that offer several different consumer insurance and financial products will take 5 percent to 15 percent off your premium if you buy two or more policies from them.

4. When you buy a home, consider what insurance will cost

Is your dream house more than 50 years old? Count on your insurance costs rising. Some insurers will offer a discount of 8 percent to 15 percent, if your house is new. By the same token, avoid buying in areas that are prone to flooding and try to buy a home that's close to the local fire station – your premiums will definitely be lower.

5. Insure your house, not the land

Insure the house – not the property on which it sits. After all, the land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy.

6. Improve your home security and safety

You can usually get discounts of at least 5 percent for a smoke detector, security system or dead-bolt locks.

7. Quit smoking

Not only is smoking one of the worst things you can do for your health, it's a habit that will drive up your homeowners insurance premiums. Smoking accounts for more than 23,000 residential fires a year. Some insurers will offer to reduce premiums if none of the home's residents smoke.

8. Are you 55 or older? Ask for a discount

If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Just ask!

9. Part of a group? You could save some money

Involved in your alma mater's alumni association? Ask if they offer group coverage. You might just get an unexpected discount on homeowners insurance.

10. Stay loyal

If you've been with an insurance company for a long time, it's likely you'll get special consideration for being loyal. Many insurers will reduce premiums by 5 percent if you stay with them for three to five years – and by 10 percent if you're a policyholder for six years or more.

11. Compare your limits

Make sure your policy covers any major purchases or additions to your home – not coverage you don't need.

12. Look for private insurance

If you live in an area that's high risk (for flooding, fires or crime), there might be an option for you to buy insurance in the private market that will save you money.

The bottom line is to shop around – it just might pay off!

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