Shopping for Homeowners Insurance
1. Click on - Call Around -Shop Around
In today’s world where information and comparing rates are just a click away, consumers can easily compare coverage and costs at the click of a mouse.
Ask your neighbors and co-workers for references. Contact www.insurance.ca.gov California to check for solvency ratings and consumer complaints. California requires insurance carriers to post their rates and provide the number and disposition of consumer complaints by individual insurers.
Consult the financial stability of the insurers with rating companies such as A.M. Best (www.ambest.com) and S&P (www.standardandpoors.com).
Beware of fraudulent and offshore insurance companies with little or no legitimacy and who will not pay legitimate claims.
Get price quotes from at least three insurers.
2. Raise Your Deductible
Deductibles are the amount of money a consumer incurs for a loss before your insurer starts to pay a claim. The higher your deductible - the lower your premium.
Most insurers’ minimum deductible is $500. Raising your deductible to $2500 may save as much as 40%.
If you reside in a natural disaster area, your insurance policy will have separate deductibles for each coverage (if you can obtain coverage at all).
Flood and earthquake damage ARE NOT covered by a standard homeowner’s policy. These are both “riders” to your standard policy. Federal Emergency Management Agency (FEMA) provides useful information on flood insurance on its web site at FloodSmart.gov.
A separate earthquake policy is available from most insurers. The cost of the coverage will depend on the likelihood of earthquakes in your area. In California, the California Earthquake Authority (www.earthquakeauthority.com) provides this coverage.
Consumers living in California (an earthquake-prone area), have such a high deductible and low damages “cap” that it is often better to forego earthquake insurance entirely.
Insurance agency watchdogs assert that if a catastrophic quake strikes with a magnitude 8 or more (on the Richter scale) -- all insurance companies involved will claim insolvency and seek bankruptcy protection from the courts and through the legislature and through their lobbyists.
As homeowners have learned from the Katrina experience, insurers are slow to pay claims until ordered by the court and often deny legitimate claims in the hope of putting off the damage payments so far into the future that survivors simply give up or die.
In the past decade Southern California was struck with several massive quakes(Northridge -Landers and Whittier Quakes). Many insurers claimed insolvency, refused legitimate claims and simply contributed so heavily to the Insurance Commissioner’s own private slush fund that many consumers never received compensation for their losses.
3. Don’t confuse land costs with rebuilding costs.
Don’t be fooled by fast talking agents. You only need to buy coverage to replace your structure and contents—not the land beneath the foundation.
4. “Bundle” your home & auto policies
Many insurers will reduce your premiums if you buy several policies (auto-home-life). Check the combined prices versus buying the different coverage’s from different insurers.
5. "Disaster-Proof" your residence
Find out from your company representative what steps policy holders can take to make your home more resistant to windstorms, hail and other natural disasters. Consumers may be able to save on premiums by adding shutters, or reinforcing and fireproofing your roof.
Older homes can be retrofitted to withstand earthquakes. Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
6. Home security
Consumers often receive discounts of at least five percent for installing a smoke detector, burglar alarms or sensor motion lights. Often premiums are reduced by as much as an additional 20 percent if homeowners install a sprinkler system complete with a fire and burglar alarm that automatically alert a security service.
Although these systems can be expensive, they pay for themselves within 5-7 years of operation. Check with your insurer before purchasing.
7. Shop for other Discounts
Insurers offer discounts to narrowly profiled groups. If you're 55 years old and retired, former or active military you may qualify.
Many employers and professional associations belong to a group auto, health and home insurance programs that are a better value than the general public can obtain on the open market.
8. Clean up your credit report
Maintaining a good credit history will cut your premiums.
Insurers are increasingly using credit history and scoring to price all types of insurance policies. Although many states (including California) outlaw this practice, insurers are increasingly lobbying lawmakers to skirt this law.
Recent legislation requires insurers advise policy holders of any adverse action, (such as a higher rate) at which time consumers should verify the accuracy of the information on their credit reports.
The caveat is it’s often too late for the policyholder to avoid cancellation fees, even if they are able to correct the derogatory information or re-apply to another insurer.
To protect your credit standing, pay your bills on time, don't apply for needless credit and keep your credit balances as low as possible. If you get a delinquent or collection notice respond to it on that same day. Many creditors use a late payment to raise your interest rate and lower your credit availability.
Many collection agencies acting in conjunction with dishonest brokers and business owners engage in a systematic extortion of consumers. With I.D. theft running rampant, many consumers pay small collection accounts (often under $1,000) despite no connection with the collection action.
For more information log on to http://ocfsbo.com/raisingyourcreditscore.html.
Federal law now requires the three major credit bureaus to provide the consumer with a free copy of their credit reports for those consumers who have been denied credit based on their history within the last year.
9. Rewrite your policy with the same Insurer
Recent changes in California law allow for insurers to voluntarily reduce their premiums by 5% -10% for policyholders who remain with them for three to six years.
10. Review your policy annually
Consumers desire their policies cover any major purchases or additions to their home. Don't spend money for additional coverage for trendy electronic items that depreciate in value AND cost while ever improving on features and technology. Don't over-insure these items.
Conversely you should have a periodic re-appraisal of appreciating possessions (i.e. antique furniture - custom jewelry and valuable art).
11.) Look for private insurance in a government plans
For policy holders who live in a high-risk areas (i.e. coastal storms, fires, or crime) -- and have been purchasing insurance through a government plan, you should shop around and check with an insurance broker for an insurance company/broker that is interested in your business.
12.) Consider the location and economic zone
Inner City Homeowners pay less for insurance than those who live in the suburbs. Newspapers headline are rife with examples of insurance companies gouging inner city inhabitants by “REDLINING." Redlining is the practice of denying or increasing the cost of services, including insurance to residents in certain often racially determined areas. The most devastating form of redlining, and the most common use of the term, refers to mortgage discrimination.
INVESTORS MORTGAGE
dandobbs6@aol.com
1300 Bristol Street North #100
Newport Beach CA 92649
Office : 949 250-3981 Fax: 949 716-4474
Copywriten April 2007…Daniel Dobbs,Broker
