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Insurance Tips

Compilation by Robin Olson of IRMI
Many consumers have faced rapidly escalating insurance premiums on their homeowners insurance during the last few years. In some cases, consumers have had trouble in procuring insurance - particularly people with several claims. Many believe they are powerless when it comes to these situations. However, numerous steps can be taken to reduce their premium (without sacrificing coverage) and to lessen the possibility of future losses. Consumers can benefit because some insurers offer loss-free discounts or lower rates based on claim history.

Saving Premium and Reducing Losses

  1. Consider increasing your deductible to the highest one you can afford, even if the premium savings do not seem to justify it. This will serve a dual purpose of decreasing your premium and increasing the chance that your loss history will be good, since incidental losses will be paid by you and not the insurance company. A loss-free record over time saves premium dollars.
  2. Consider purchasing a monitored burglar alarm. Most insurers provide discounts to homeowners with these alarms, some as high as 20 percent. Burglars often pass by homes with prominent burglar alarm signs displayed, opting for homes without these signs. Property identification programs are another deterrent to burglary. These programs provide stickers on which your identification number is permanently imprinted. You then place these on all valuable personal property. This makes it more difficult for burglars to fence or pawn your property.
  3. Replace washing machine hoses when they show signs of deterioration, because a burst hose can cause extensive damage. Inspect the hoses on a regular basis. In addition, turn off the washing machine water faucet when the appliance is not in use to prevent leaks.
  4. Maintain your roof in optimal condition. A roof inspection on a periodic basis can identify sections that need repair and thus prevent water losses. Roofing materials containing high wind resistance features should be considered in windstorm-prone areas.
  5. If you experience a water leak, make sure it is properly repaired and remediated, which can include the removal and replacement of building materials such as sheetrock. For larger water leaks, a professional who specializes in remediation should be called in. These measures will reduce the possibility of hazardous and expensive mold losses down the road.
  6. If you are considering buying a home, be aware that many insurance companies offer new home discounts. Some insurers offer up to 20% discount on brand new homes and gradually reduce the discount percentage as the home ages.
  7. Request a copy of a CLUE report (Comprehensive Loss Underwriting Exchange) on the home you are considering buying. This report provides a list of prior losses for a particular home. It is generated from a database of insurance losses compiled by a high percentage of insurance companies. You can normally contact your current homeowner’s agent to get this information on a prospective home. Be wary of purchasing a home experiencing prior foundation, water, or mold losses.
  8. Train yourself on how a fire extinguisher works. Always keep a fire extinguisher in the garage as well as the kitchen and on each floor of your home. In addition, the furnace should be inspected each fall by a licensed professional.
  9. Install and maintain smoke alarms throughout the house. It is best if the alarms are interconnected, so that if one goes off, they all go off. Test the smoke alarm once a month. These detectors should be approved by Underwriters’ Laboratories (UL) or other recognized testing laboratories.
  10. Consider purchasing both your homeowners and personal auto coverage with the same insurer. Our standard insurers offer home/car discounts for multi-line customers.
  11. Make sure the insurance carriers you do business with are financially strong.  Do not select a particular insurance company just because it has the lowest rate. Other factors to consider are claims handling reputation, customer service, and financial strength. Keep in mind, however, that some insurers offer long-term customer (e.g., 5 or more years) discounts. These can make it worthwhile to stay with your current insurance company if you are pleased with their service.
  12. Periodically check your credit rating. There may be cases in which an error has occurred which could negatively affect your rating. The credit bureau has procedures in place to remedy these situations.

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