How To Save Money on Your Homeowners Insurance

March 08, 2017

When my husband and I shopped for homeowners insurance back when we bought our condo a couple of years ago, I knew from my CFP® training that all homeowners policies are required to cover the basics. I also knew that if we wanted coverage of things like flooding from a backed up toilet or frozen pipes, we’d need to ask for those. But beyond that, we wanted to make sure we were adequately covered without over-paying.

Now as our premiums go up about 6% per year, purportedly to account for the increase in what it would cost for the insurance to cover a loss (if only wages kept up with this supposed increase in costs!), we are shopping around to make sure we’re still getting the best value for our money. If it’s been several years since you’ve shopped your homeowners insurance policy around, it could be a great place to find some extra money in your budget. Here are some tips from my colleague Teig Stanley on how to go about doing that:

First, you’ll need your “DEC page,” which is short for “declarations” page. Then, take the following 5 steps:

1. Use a broker to shop for coverage. There is no need for you to go through all the time/effort yourself. Ask the broker to provide three quotes compared side by side so you can compare apples-to-apples.

2. Make sure the quotes have the same criteria:

Deductible – This should include the separate deductible for wind/hail/water or other events that are geographically specific.

Home Value – If it’s been several years, this probably needs to be adjusted since your home has probably increased in value. Most insurance companies’ software will assign a value automatically based on actuarial data specific to the address.

Cost – Is the payment quoted monthly, annual, quarterly, etc?

Replacement Cost Coverage – Some policies replace up to 100% of the benefit for which they’re written. Others replace 125% – 150% if the home is a “total” loss.

3. See if you can apply any special discounts – military, occupation, no recent claims, alarm systems, etc.

4. Contact insurance companies that don’t broker out (like USAA) if you qualify so you can obtain a quote to compare.

5. Give the broker a copy of your current DEC page and cost (don’t worry, they can’t do anything manipulative with the premium) as well as permission to pull your credit so they can get accurate quotes. It’s a “soft” credit hit, so it won’t have a negative effect on your credit score.

Finally, you can find some additional insight and tips in this post from another colleague, Greg Ward. He shopped around himself and found a much better deal. Of course, I would be remiss if I didn’t point out that any cost savings you realize from this process should be used to either increase high-interest debt payments or bump up your savings rate toward your emergency fund, retirement or other goals.

Kelley Long is a resident financial planner with Financial Finesse, the leading provider of unbiased workplace financial wellness programs in the US. For more posts by Kelley or to sign up to have her weekly post delivered to your inbox each Wednesday, please visit the main blog page and sign up today.

Your 4 Week Financial Check-Up Challenge: Week 4

June 15, 2015

This week is the last in the Financial Check-Up series and the final opportunity to enter your name in a random drawing for a personal financial planning consultation. Multiple entries are acceptable so be sure to like Financial Finesse on Facebook (or like this blog), tweet us on Twitter, or enter your comments below to enter your name for a professionally guided financial check-up. All entries received by Friday, June 19 at 11:59 PM will be entered into the drawing and the winner of the financial planning consultation will be announced next week. (If the winner prefers to “pay it forward” the consultation is transferable and may be gifted to a friend or family member.) Continue reading “Your 4 Week Financial Check-Up Challenge: Week 4”

Why You Might Need Umbrella Liability Insurance

April 20, 2015

It is no secret that debt is a major obstacle on the path to financial wellness. Imagine what it would be liked to be saddled with a debt that follows you around for the rest of your life. There are many people that find themselves exactly in that position after a disastrous incident, and it’s not because they weren’t insured. It was because they weren’t adequately insured with the right type of insurance. Continue reading “Why You Might Need Umbrella Liability Insurance”

Get a C.L.U.E.

September 02, 2014

Want a clue on how your auto and homeowners insurance is determined? Any prior claims you have filed in the past 7 years for collision or comprehensive damage on your car or theft, fire, or storm damage to your home are reported to C.L.U.E. – which is the Comprehensive Loss Underwriting Exchange. Too many claims on your C.L.U.E. report could even lead to being dropped by your insurance company. Continue reading “Get a C.L.U.E.”

Oh No, I Forgot to Check My Line-up!

September 02, 2013

If you are a sports–obsessed, fantasy football player like me, you’ve probably been mortified as you said those dreaded words at some point. If you are a football widow like my wife, you’ve probably heard that before and wished it happened a lot more often. Why does someone need to check their fantasy team line-up? Didn’t they spend a bunch of time in August putting together the greatest draft strategy in the history of man or at least the history of football? With super star players dominating at every position, why should you bother with something as mundane as checking your line-up before each game?

Well, I guess someone could get hurt. Of course, every team has a bye week so you wouldn’t want to start Tom Brady if the Patriots are off. If you really want to reach the playoffs, then I guess you might not play a lot of Broncos wide receivers if Peyton Manning couldn’t play.

Of course, then there is my team. If usual form holds true, my quarterback will be crippled by week 3 (Sorry to all Matt Ryan and Julio Jones owners), I will not realize that my back-up quarterback, tight end, kicker and defense have the same bye week and my can’t miss rookie running back will be buried somewhere below whale dung on the depth chart. In short, stuff happens.

The same is true in our financial life. It always amazes me to see how much time, effort and money people will devote to putting together a financial plan and then rarely if ever re-visit the plan. In my own life, I’ve seen multiple changes in the last year, let alone the last 5 – 10 years. Sticking with the old plan would be a quick trip to the losing locker room. While as any of the guys in my fantasy football league will tell you, I’m the last person who should give fantasy line-up advice, here are a few tips for how and when to check your financial line-up:

Set a time each year for an annual review of your plan

Have it coincide with the start of something like New Year’s or the start of the school year

Resources: Financial Planning Checklist Financial Goals Worksheet How to Check Your Family’s Finances (9-minute checkup) E$Planner (Retirement Calculator)

Re-balance your investments

If you aren’t in funds that re-balance automatically, this should be done at least once a year
When you do your annual review you can choose another memorable day like April 15^th

Resources: Beginner’s Guide to Asset Allocation, Diversification, and Rebalancing Guide to Rebalancing (WSJ) Create an Investment Policy Statement

Review your home and auto insurance

Having inadequate coverage could leave you in a huge bind, or you could be paying too much
Start this process about 60 days before your annual policy renewal so you have time for changes

Resources: Cars and Auto Insurance Homeowners Insurance Homeowner’s Checklist

Update your budget

This is really the most basic and most crucial. Probably good to do with those resolutions, but if you don’t remember when you last updated your budget, do it NOW!

Resources: Budget and Net Worth Worksheet Mint You Need a Budget How Do I Create a Budget?

Re-evaluate your estate plan

This is definitely one that everybody puts off because it just isn’t any fun and can be depressing to think about. Consider doing this on every 5^th birthday, for example 40, 45, 50. A lot can change in 5 years from tax laws, to your income, to kids being in the home or not and even your health situation. You probably will do something fun anyway for that milestone birthday so that can cheer you up after thinking about this.

Resources: 5 Steps to Estate Planning A Simple Estate Planning Checklist For a Challenging Topic

Last, obviously if God forbid your star quarterback really does go down with a season-ending injury (please stay healthy Matt Ryan) you need to reassess your fantasy team immediately. If you have a major event in your life, good or bad, it is always a good time to do a top-to-bottom review of your plan to make sure that it is still relevant for you and your family. Please, pay attention to your financial line-up and if you have any ideas on back-up running backs leave them in the comments section ASAP!

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Do You Have These Essential Financial Protections in Place?

December 20, 2012

One of the most difficult financial challenges people often face is trying to decide how to balance competing goals. A typical situation might be someone who wants to pay off student loans and credit card debt, save for emergencies and a home purchase, start putting something away for retirement, open a college account for their newborn, and purchase disability and life insurance. Yet, they only have a limited amount of money they can save each month. Continue reading “Do You Have These Essential Financial Protections in Place?”