Every homeowner relies on homeowners insurance to defer the risk of loss associated with owning a home. Premium costs are directly affected by a number of factors that can be adjusted by the informed insured homeowner. In depth research is essential to acquire the best possible homeowners insurance policy without overpaying for the coverage.

Right Company

All insurance companies are rated by the state insurance commission wherever the company is licensed to underwrite insurance. The rating information is available online and should be reviewed during the evaluation process and prior to purchase of the policy. Big name auto insurers like State Farm and Allstate also offer home insurance but doing adequate research is key. A company’s proven payout record is essential to the financial future of the insured in the event of a catastrophic loss.

Experienced Agent

Prior to the purchase of the policy an experienced agent will ask appropriate questions that encourage the insured to improve the property in ways that will lower the risk of loss and reduce the premium associated with the policy. Changes to laws and insurance coverage rules directly impact the insured policy holder, and the experienced insurance agent will communicate actively with every person he represents. Any change that could save money for the insured must be communicated without the policyholder having to initiate the conversation.

Replacement Value

Premiums are directly tied to the amount of coverage written into the policy. The cost to replace the contents and rebuild the home at current market rates is considered to be replacement value. While market value policies are substantially less expensive, the homeowner will not receive enough funds to rebuild the home and replace the contents in the event of a total loss. All homeowners policies should be written to cover the replacement value of the home and the contents.

Sufficient Coverage

Every insurance policy contains stated coverage amounts that act as thresholds for the highest payout required from the insurance company. When replacement costs are underestimated, the benefit paid by the insurance company will not exceed the stated coverage amount. Specific cost estimates are provided to insurance companies by the construction industry based on location, labor costs, and material costs. Overstated coverage amounts are not beneficial because the insurance premium will be higher, but the insurance company will only pay the actual replacement value of the home and contents.

Liability Coverage

Every homeowners insurance policy carries a liability component to cover damage incurred to nearby property caused by an event on the insured property. Many insurance companies are offering umbrella liability insurance policies to cover the gaps left between each of the major insurance policy types like auto and home. The liability component of the policy has a separate stated coverage amount that acts as the payout threshold.

Safety Features

Lighting, railing, fire suppression, smoke alarms, and fire extinguishers are viewed by insurance companies as risk-lowering efforts by the homeowner. To encourage the use of each of these devices, the insurance company will lower the annual insurance premium for any home where these features have been installed and maintained in good working order.

Security Measures

Dead bolt locks, alarm systems, security screen doors, and cameras are acceptable theft and entry deterrents. Insurance companies will lower annual insurance premiums for homeowners who install security measures that lower the risk of loss of property. Specific statistics are maintained by the manufacturers, emergency responders, and insurance companies to assess the risk reduction associated with these measures. In certain locations, these measures are required for a homeowner to be eligible for homeowners insurance.

Policy Discounts

Insurance companies offer discounts to certain groups of people to reward policy holders for loyalty and perceived reliable lifestyle habits. Senior citizens are given premium discounts because they are perceived to be more mature and responsible about maintaining the value of the property. People who have multiple policies with one insurance company are awarded with discounts for keeping all of their insurance with one company. Keep in mind that even your credit score will affect home insurance rates so be sure to shop around. Agents do not always offer information about discounts, but every insured policyholder should ask for discount information.

Affordable Deductible

Every homeowners policy has at least one deductible that must be paid by the policyholder prior to the insurance company paying the claim. Care must be exercised to set the deductible at an affordable level to prevent hardship for the homeowner in the event of multiple losses. When the automobile is lost at the same time as the home, both deductibles will be subtracted from the insurance payout. If the insured is not able to afford the combined deductibles, the amounts are set too high. Very low deductibles will raise the annual insurance premium.

Specialty Riders

Valuable possessions are less expensive to insure under a rider that is attached to the standard homeowners insurance policy. Replacement values are provided by certified dealers of each type of item and attached as the stated payout for the specialty rider. The calculated risk of loss is lower for the rider because of the probability of loss. Specific statistics are tracked to set the premiums for each type of rider attached to a homeowners policy. Insurance agents should be given information concerning valuable possessions that are present in the home.

Choosing the Best Policy

Homeowners insurance policies are required by lending institutions that carry a mortgage against the property. Specific coverage amounts are required and the proceeds from the policy must be used to restore the value of the property to the prior condition following a loss. Certain home improvements will add to the value of the property but may actually lower the premium amount because of the safety or security added by completing the project. All information must be provided to the insurance agent on an annual basis to allow coverage amounts to be adjusted to prevent loss. The role of the insurance agent is to balance the risk against the cost for the benefit of the company and the homeowner.