Home Insurance facts for new home owners and dummies
If it is the first time you get home insurance or you have never spent any time or effort looking into your home insurance, you are in for a surprise. There are many savings you can make by just taking some simple steps.
But let’s start with the basics, we did say it was an article for newbies and dummies : 0p
Here are some basic facts that will help you understand how insurance companies work and why they work like that. Home insurance companies are in the business of paying for the damage caused by accidents and natural disasters. These accidents may or may not happen. These accidents are more likely to happen to some people than others. Home insurance companies love to insure low risk customer (not prone to accidents and natural disasters) they would rather not insure the high risk / expensive clients that are likely to cost them more than they pay. Obviously your job is to make yourself look as low risk as possible.
What makes you a high risk customer?
- Where you live. Living in a high crime rate part of town will increase the risk of burglary and with that your premium.
- Your habits. Smokers pay more insurance because they are more prone to home fires. Home insurance companies offset this increase in risk by upping the home insurance premium policy.
- Your home safety. If you house is safe and is as burglar proof as possible, home insurance companies will acknowledge this by reducing your premium.
- How often you make a claim. Customers who claim all the time for every little thing are expensive both in cash and time for home insurance companies. Home insurance companies will respond by either denying insurance coverage for you or increasing your premiums astronomically.
What can you do to counteract these high risk high risk factors. Here are a few examples:
1) When buying or renting a house it is worth considering the crime rates and type of neighborhood it is, home insurance rates being the one of the least important reasons to do so.
2) Stop smoking. Again the reduction in home insurance premiums is the least important reason why.
3) Increase your home safety. You can do this any number of ways: Install a home security and alarm system. Install dead bolt locks that will minimize the chances of accidentally leaving your door open. Both these security measures have ulterior benefits like the safety of your family.
4) Deductibles on your home insurance mean that the customer, i.e. you, will pay for a variable initial amount. For instance, if you agree to a $500 deductible you will be responsible for the initial $500 of any claim. This is probably the most effective way of reducing your insurance premium.