Special
Report for Homeowners
Insurance
Insider Reveals Little-Known Secrets:
10 Ways You Can Save $
on Your Homeowners Insurance -- And Provide Better Protection for Yourself and the
People You Love!
By Michael C Konopelski, CIC
Your home is
probably your most valuable asset. It is also a
huge risk for you financially. What if something happens to
it? A fire? A flood? Vandalism? What if someone visiting you slips, falls and
suffers a serious injury? And sues you? An accident like that could put a dent
-- or worse -- in your financial security.
For most people,
insurance is a mystery. They know they need to have insurance for their homes
(mortgage lenders require it), but they don’t understand the coverage provided
by the policy. And they don’t know which insurance companies offer the best --
the best! -- prices. Because they don’t understand the product, many people
think insurance is a rip-off, and it is -- if you pay too much or buy coverage you don’t
need.
All homeowners
insurance is not created equal. In fact, almost none of it is. There are thousands of different products
out there, from hundreds of insurance companies. How do you find the
insurance and the insurance company that are best for you? You read this
special report and tap into my vast knowledge of the products and the companies
that offer them.
I am an
insurance “insider.” A licensed member of the “club.” I’ve sold the product. I know what kind of
insurance fits your needs. And I know what insurance companies sell this kind
of insurance at the best -- lowest! -- price. Because I’ve specialized in the insurance
needs of homeowners and their families, I have decided to dedicate myself to
solving for you some of the mysteries of homeowners insurance.
Your homeowners
policy does not provide coverage for all potential catastrophes that could
damage or destroy your home. Earthquake and
flood are two “perils” for which there is no coverage. (You can
get coverage for earthquake and flood damage in a separate policy) Also, there is no coverage for damage caused
by water that seeps into your home from the ground. You do have coverage for
losses related to fire, smoke, lightning, wind storms, hail, explosions,
vandalism and theft.
There are
different ways to insure your home, both the structure and your personal
property. Let’s take the structure first. There are two types of coverage:
replacement cost and actual cash value. Replacement cost is
better for you, the homeowner. Under replacement cost coverage, the insurance
will cover the cost of replacing the part of the structure that is damaged, up
to a maximum dollar amount. Under actual cash value, the insurance will cover
the cost of replacing the damaged structure minus an allowance for
depreciation. If you have an older home, that allowance could be quite
significant. Unless
your policy specifically says it provides replacement cost coverage, the
coverage is for actual cash value.
So how much
insurance should you have? Basically, unless you want to pay some of the costs
yourself, you should insure your home for what it would
cost to rebuild it if your residence were destroyed. How do you
find this out? Your insurance agent can have an answer for you in no time. If
you don’t have an insurance agent -- and you should -- you can contact your
local builders association. In the home construction world, building costs are
calculated on a square foot basis. As such, to determine the cost to rebuild
your home, take the square footage of your house and multiply by the average
per square foot building rate in your area.
Your possessions
are also insured on a replacement cost or actual cash value basis. Again,
unless specified otherwise, the coverage in your policy is actual cash value. Homeowners
policies also have limits on coverage for such items as jewelry, fine art and
computer equipment. Read your policy and see what these limits
are. For example, the standard policy
will provide a maximum of $1,000 coverage for your jewelry if it is lost or
stolen. If you have lots of jewelry, fine art or computer equipment, you should
consider purchasing a special personal property endorsement or “floater” that
provides the coverage you need.
Speaking of
need, you
need to take written and visual (still pictures or video) inventories of
everything you own in your home and in other buildings on the property.
Include all furniture (indoor and outdoor), appliances, stereos, computers and
other electronic equipment, hobby materials and recreational equipment, china,
silverware, kitchen equipment, linens, jewelry and clothing. For the major
items (computers, televisions, stereo systems, etc.), write down the serial
number, make or model number, purchase price, present value and date of
purchase of each item. If you have the receipts for the items, attach them to
the inventory. Make at least two copies of the inventory and store one of
those copies offsite -- a safe deposit box is a good place. Store the pictures
or video of the inventory offsite as well.
Now that you
know the basics of a homeowners insurance policy, here are 10 ways you can pay
less. In many cases, you can get the same level of coverage for fewer dollars.
1.
One Insurer, Multiple Policies -- Do you have an automobile insurance
policy? If so, is it with the same insurance company that provides your
homeowners insurance? If the answer’s no, you’re paying too
much -- for both policies. Almost every insurance company that
sells homeowners insurance wants its policyholders to also buy auto insurance
from that company. These insurers offer so-called multi-policy discounts.
Usually, these discounts are at least 10%
-- and some insurers apply the discounts to both the auto and the
homeowners/renters policy.
2.
Raise Your Deductible -- The deductible is the amount you pay
before insurance kicks in if you have a claim. For example, if you have a $250
deductible and you file a claim for $1,000 in damage to your home, you pay the
first $250 and your insurer pays the balance, $750. The higher the deductible
you choose, the more you pay. Also, though, the
higher deductible, the less you have to pay for your policy. Depending on the insurance company, you
can save between 12% and 37% if you have a deductible of $500 to $5,000.
3.
New Is Better -- Insurers really like newer homes.
That’s because it’s less likely something will go wrong with the electrical,
heating and plumbing systems. In addition, the structure itself is in better
shape. Insurers
offer discounts of as much as 8% to 15% if your residence is new.
4.
Location, Location, Location -- Where do you live and what is your
home made of? If you’re in the Eastern United States, it’s better from an
insurance perspective to have a brick or masonry residence because such a
structure has a greater resistance to wind damage. By contrast, frame homes are
better in the earthquake-prone West. The right structure
in the right region can save you 5% to 15%. Further, if your
home is near a fire station, you will pay less for homeowners insurance. If you
live in an area that is prone to flooding, you may be required to buy a flood
insurance policy, which costs about $400 a year. If you
are not required to buy the coverage and still live in a flood-prone area, your
homeowners policy will not provide coverage for losses arising from flooding.
5.
Insure the House, Not the Land -- Nobody is going to steal your land.
Fire and high winds won’t “destroy” it. As such, when deciding how much
homeowners coverage to have, don’t include the value of the land, only the
value of the house and any other buildings on the property. If you
include the value of the land, you’re paying too much.
6.
Don’t Insure What You Don’t
Have -- Each year,
you should review your policy to see what coverage you have for your
possessions. If you have made a major purchase, you will want to increase your
limits of coverage, but what if you sell something or somethings? You don’t need
as much coverage. Pay particular attention to items that are covered
by endorsements or “floaters” to your policy, items such as jewelry and
computer equipment.
7.
Better Safe(r) Than Sorry -- Smoke detectors, burglar alarms and
deadbolt locks are usually worth discounts of at least 5%. You
can get even bigger discounts, 15% to 20%, if you install a sophisticated
sprinkler system or an alarm system that rings at the police station or a
security company. However, not all of these systems qualify
for discounts. Before you install one, check with your insurer to find out what
type of system qualifies for a discount and how much you would save on your
premium if you installed the system.
8.
Where There’s Smoke . . .
-- There’s fire. Smoking (unattended cigarette butts, etc.)
produces more than 23,000 residential fires in this country each year.
That’s why some insurers have discounts if all the residents in a home are
nonsmokers.
9.
Group Discounts -- Some insurers offer discounts to
certain business or alumni associations. If you are a member of such an
association or associations, ask the director(s) of the association(s) if there
are any insurance companies providing discounts to association members.
10.
Don’t Jump Around -- If you’ve been with an insurer for a
while and you like that insurer, stay put. Some insurance companies automatically have
discounts for policyholders who have been with the companies for a certain
number of years. For example, 5% for at least three years, 10% for
at least five years.
I won’t kid you.
There’s more to this insurance game than saving money. In fact, while it’s nice
to lower your insurance costs, it’s probably even more important to make sure
you, your loved ones and your assets are covered adequately. It’s not a pleasant
thought, but insurance is about worst-case scenarios.
It’s also about peace of mind, knowing that you have the worst-case scenarios
covered.
Because I know
peace of mind is so important, I am willing -- actually, I’m excited -- to
reveal to you the secrets about insurance. Secrets that ensure
you have all the protection you need.
Why would I just
give these secrets away? Because it’s just as good for my business as it is for
you. I want to let
you in on the knowledge I have accumulated as an insurance industry
professional and insider. I want to do this because I have found, time and time
again, that generosity and the willingness to provide really great service come
back to me. Tenfold. In fact, that’s how I have built my business.
There are three
basic steps you can take to protect your and your family’s financial
well-being:
1.
Have an insurance specialist
conduct a risk analysis of your home, car(s) and family. How can you adequately address your
risks with insurance if you don’t even know what these risks are? I’ve found
that most people face more risk than they know. Because everyone is different,
it’s not like you can ask a friend or relative to assess your insurance needs
-- unless they are insiders in this business. If you
haven’t had your risks assessed by an insurance professional, you could be
inviting financial disaster. You need a professional, a
knowledgeable insurance insider, to put together a comprehensive insurance plan
that truly protects you. Our office will do that for FREE.
2.
Use an independent agent. There are several ways home insurance is
sold in this country. Some people buy it by calling a toll-free number and
talking to an employee of an insurance company. Others take advantage of direct
mail offers. And some buy from agents who represent just one insurance company.
A direct mail piece is not going to be able to assess your
level of risk. Do you really want an insurance company employee to be your
agent? And what happens if the agent who represents just one company doesn’t
have the kind of insurance coverage you need? You need someone who’s going to work for you. And
you need someone who can offer you several options. Someone who can go to
numerous insurance companies and compare their products and prices. Someone
who, if necessary, can place parts of your insurance program with more than one
company. Do you want a good price? Do you want options and flexibility? And do
you want protection against worst-case scenarios? There’s only one option here:
Use an independent agent.
3.
Don’t trust the financial protection of you, your family and your
assets to an insurance agent who is not a homeowners insurance specialist. A specialist? Absolutely. Look, insurance is a huge
industry. There’s insurance for everything.
And nobody can specialize in all of it. In fact, a
professional independent agent can specialize in only a few niches -- and
really understand them. And I do. I’ve studied the homeowners insurance market
in our community for years.
Hurst-Weiss Insurance
& Investment Services (412) 922-8222