Shop Around to Cut the Cost of Insurance
The East Coast couple had been satisfied with the rates and coverage that their insurance company had provided for their home for more than a decade.
So when they moved to Denver, they planned to stay with the same company—until they got the bill for their premium.
Eventually, they discovered that the company wanted to limit its exposure in the Denver area—hence the mile-high prices. So the couple did a little shopping around and found that other companies would provide homeowner’s insurance for their Denver home for a lot less.
“Shopping around could save you money, there is no question,” says Carolyn Gorman, a vice president with the Insurance Information Institute.
Gorman says comparison shopping for homeowner’s insurance is one way to fight rising premiums. “It’s been a difficult 20 years for homeowner’s insurance,” she says. “And I don't think any insurance company will tell you [the situation] is getting any better.”
There are a number of reasons for the steep rise in the cost of homeowner’s insurance, starting with the fact that many homeowners are flocking to scenic areas that are prone to violent weather.
“More than 50 percent of homeowners now live within 50 miles of a coastline where there could be flooding,” Gorman says. “And more people live near forests where wildfires are prevalent.”
In addition, the homeowner’s insurance industry has taken a hit from homes that have had problems with mold. Mold remediation is quite costly, and many insurance companies are now limiting the amount of damage they’ll pay for or are excluding mold remediation costs entirely.
“Insurance companies are finding that in some areas of the country, they can't make money,” Gorman says. “As a result, there have been a lot of nonrenewable policies in recent years in certain areas.”
When shopping around for the best policy at the best price, be sure to take these steps:
Don’t just pick the least expensive policy. Instead, choose a company that provides a good policy at
a reasonable price and will stand behind its policies
and provide great
customer service.
Don't just shop for the lowest rate possible. Look carefully at the company and the quality of the customer service it provides as well as the price. “You want to determine what services the insurer really does offer,” says Charles Nyce, the senior director of knowledge resources for the American Institute for CPCU/Insurance Institute of America. “Do a comparison of price, but also do a comparison on service.”
Talk to family, friends and neighbors to see how their insurance companies treat them. “They often are wonderful sources of information about various insurance companies,” Gorman says.
Use the Internet to search out information on companies and pricing. “Shopping for insurance has become a lot easier thanks to the Internet,” Gorman says. “But again, don't go for the cheapest rate you can find.” Instead, look at the entire package.
Do your due diligence. Before you purchase a policy, check out an insurance company’s financial stability, Gorman says. “You want to make sure they have the resources behind them to pay for your claim.” Consumers can usually get a financial snapshot of a company through their state’s insurance department.
In addition, the National Association of Insurance Commissioners’ website (www.NAIC.org) has a Consumer Information Source that allows consumers to see how many complaints have been filed against a particular company.
Consider using an independent insurance agent to help you find the right policy. “If you have a big, expensive, high-end home, you will want to find a homeowner’s insurance company that specializes in that product,” Gorman says. “An independent insurance agent can help with that sort of search. They will also be an advocate for you.”
Ask about discounts and other ways to keep your premium low. Consider choosing a higher deductible. Tell the company about the safety and security improvements you’ve made to your home. If you’re over 55 years of age, ask for a senior citizen discount. You should also inquire if the company will offer you a discount if you purchase other types of insurance (auto, life, etc.) from them.
“Overall, it may seem like a lot of work, but you want to purchase insurance from a company that you will be happy with,” Gorman says
Jim Sulski is a longtime Chicago-based writer who has contributed to a number of publications and websites, including Midwest Construction, Crain's Chicago Business, MSN.com, Chicago Social Magazine, The Chicago Journal, Success at Home, The Chicago Tribune and the Right at Home website.Association.