If you go to your favorite search engine and type “homeowners insurance Maine,” you’ll be hit with a lot of ads. “Want the best deal? Come to me!” Not much help, at least initially. By all means, go out and get quotes from as many companies as you can, but if you really want to save money on homeowners insurance, first ask yourself three basic questions: One, what do you need? Two, what do you want? And three, what have you got?
What Do You Need?
There are three levels of homeowners insurance, generally speaking. The basic level will protect you against theft, fire, and certain civil liabilities, as in when your neighbor steps on your rake and breaks their nose. The mid-level package will protect you against the vagaries of water and weather, such as burst water pipes or snow damage. And then there’s the umbrella package, which covers you for everything except floods or earthquakes. Not having insurance is the most expensive route of all, but for the most part, people save money on insurance by not buying insurance they don’t need.
For example, if you’re not buying a circus, you won’t need an elephant policy. If the home you’re buying is located in a desert, then a policy that covers snow damage is probably not for you. But there’s more to this “location, location, location” thing than meets the eye. What local conditions most affect the quality of life for people who live where you’re trying to buy a house? What is the history of your region, and what if anything has occurred there that might affect your new home? At the very least, make sure you see the CLUE (Comprehensive Loss Underwriting Exchange) report, which will give you the claim history of the property you want to buy.
You can save money on homeowners insurance by tweaking the policy or by tweaking the house itself. For example, many people save money on homeowners insurance by paying higher deductibles. This can be expensive when disaster strikes, but it can also help you save for such an event in other ways. Or if you want to buy a house in an area prone to flooding, you might be able to raise or reinstall your utilities at a higher level, and get a reduced rate that way.
What Do You Want?
It’s fun to play house, to look at your potential home and say, Wouldn’t it be nice to have a hot tub on the deck? How about a swimming pool? All great-to-have stuff, but all of those items drive up your insurance costs. Of course, a garage adds to the value of your house, but it will also add to the amount you’ll have to insure. If money is no object and you can afford to cover a house, all the amenities, and all your aspirational needs, go for it. Must be nice. But if you’re like the rest of us, you’ll need to figure out what you really want from this new-home experience. A new home? Right. A pool? If that’s what your little heart desires, of course. But in the context of saving money on house insurance, you may find that you really don’t want a pool or a trampoline after all. The local gym has all that stuff, so let them insure it.
A lot of people dream of buying a classic home, something that has architectural significance, which is not in itself a problem. But if you want to buy a classic Victorian home or some other piece of local history, it’s good to verify the age of the electrical work. Ancient knob-and-tube electrical work may look cool, but from an insurance standpoint, it’s definitely a liability.
What Have You Got?
Collecting antiques is a great hobby, and if you’re that kind of person, nothing looks better in your driveway than a ’57 Chevy convertible. Fine art? Wow, aren’t you lucky. Horses are fun, too, as are yachts and clocks and guitars and such. All of these things can be covered under homeowners insurance, but they’ll also inflate your insurance bill. If you have these things and they’re a necessary part of your life, you should find out what it costs to insure them separately. You may find that a specialty insurance company can get you a better deal than just throwing it all on your homeowners policy. Look into combining home and auto insurance policies. Pets add a lot to life and many smart people wouldn’t want to live without them. Nevertheless, it’s good to remember that having a dog or other dangerous critter around will affect the cost of your policy.
And while this may seem obvious, it bears repeating: Do you have a good credit report? It may be good enough to get a loan for a house, but people with higher credit ratings pay less for homeowners insurance, so it pays to clean up your credit report before you start to shop.
This all may sound like a lot of research, but you will be paying on that mortgage for 20 years or more, and you can save an awful lot of money by answering these questions. Good luck!
2 Point Highlight
If you really want to save money on homeowners insurance, first ask yourself three basic questions: One, what do you need? Two, what do you want? And three, what have you got?
Make sure you see the CLUE (Comprehensive Loss Underwriting Exchange) report, which will give you the claim history of the property you want to buy.
