As many Americans enter their “golden years” and are limited to a set income, they often start to look for ways to cut costs and save money. One such place could be on your homeowners insurance. It’s important to note here that we are not suggesting to cut essential coverage and buy a cheap policy. We are very enthusiastic about getting quality coverage and not cutting corners. However, there are many things that can be done to cut expenses and still have a quality homeowners insurance policy in Arizona. Here are list of tips for homeowners that are looking to protect their assets and retirement .
Increase your Deductible
Is your deducible $500 or even $1,000? If so, we’d recommend to go higher than that. Ask yourself if you would even file a claim for something that small. If your answer is no, then why would you have a deductible that low? You may be surprised at the amount of savings to be had by simply raising your deductible to $2,500. Here’s the reason a low deductible isn’t the most cost effective way to go- filing a claim will cost 5 years of elevated premiums. It doesn’t matter if the amount claimed is $500 or $50,000, a claim is a claim and it will raise your premiums for 5 years. So there is no point to filing small claims. If there is no point in filing small insurance claims then there is no point in paying extra to have a low deductible. Many people think of home insurance as a home warranty; there to pay for minor losses and appliance issues. This is not the case, and if you treat it as such and file small claims all the time, pretty soon your insurance costs will be insanely expensive (if anyone will insure you at all). Think of home insurance as a policy for catastrophes- your home burns down, the wind rips your roof off, etc, not as a home warranty program. Chances are, if you are retired, you have a good emergency fund saved up. Allow this to act as a buffer for those low cost losses at your home. Paying out of pocket for these smaller expenses saves you big time in insurance premiums down the road.
Don’t allow your policy to lapse
By the time you’re older and retired, chances are you don’t have a mortgage. Mortgage companies are usually the responsible party to pay the home insurance premium. With no mortgage it falls on you to pay the premium. Make sure you have the bill coming to you in a way you know you will receive it and pay it. If you do better with email then ask for a paperless bill. If you don’t like to check your email then be sure to let them know where you’d like the bill to be mailed to. It may even help to ask the bill to be sent to you and to someone else such as a child or other trusted relative. Allowing your policy to lapse will increase your premiums a significant amount. You don’t want to go even one day without coverage.
Insurance carriers don’t reward loyalty like they used to! Almost always, if you have been with the same company for over 5 years, you are overpaying for insurance. Safe Street Insurance recommends working with an insurance broker that can represent multiple carriers. This way you can rely on them to shop your insurance rates each year to make sure you have the best coverage for the best price. If you choose to not work with a broker, make sure you shop around each year. Start this process a month or two before your policy expires to ensure you don’t get down to the last minute.
Don’t cancel your policy
This one sounds fairly obvious, but you’d be surprised! Just because you no longer have a mortgage requiring you to have coverage does not mean you don’t need insurance. Some people think that because they have never filed a claim and no longer have a mortgage that they can cancel their policy. This is not the case! You never know when disaster can strike. Your home is probably one of your largest assets, don’t leave it unprotected and put your retirement and life’s work at risk.
Check your liability coverage
When you first buy your house and don’t have much to protect, $100,000 in liability coverage probably sounds sufficient. Most will pruchase this coverage and then never think about it again. By your retirement, you are sure to have much more that needs protection. $500,000 or more is probably the wiser choice, and the great news is that it usually is very inexpensive to raise your liability limit.
Get an umbrella policy
When you want more liability coverage buy an umbrella policy. This is a very cost effective way to cover and protect yourself. Personal liability is probably the most overlooked coverage. We recommend that all our clients purchase an umbrella policy. For more information on umbrella policies and what they cover, click here.
Don’t just assume that everything is covered under your home insurance policy. Things like jewelry, firearms, and other valuables often have limits of coverage. Additional riders need to be purchased in order to cover yourself and assets correctly. Be sure to check with your agent and make sure everything is covered as you want and need it to be covered.