Seizing the incredibly low interest rates have brought many homeowners to another question- what to do with our home insurance policy? Yes, you can shop that too if you are already in the mood for saving money. Getting a better price can come in many forms and not all of them are good. Here are some things to look for when switching home insurance companies.
#1 Check Your Inspection
You may have replaced your roof since you bought the home or installed hurricane shutters. If your bank is requiring an inspection, get a wind mitigation inspection too, which can sometimes just be added to the inspection report. It could end up saving you quite a bit of money, especially if it's an older home with updates. Some of the things they are looking for can have a huge impact on your premium:
- Age and shape of the roof
- Quality of material used
- Opening protection
#2 Check Coverage Amounts
The last time you looked at this was probably way back when you bought the property and it may be far less than the current replacement cost. We are seeing a lot of properties in Santa Rosa Beach valued at $200-$300 per square foot and if you have had your house 10 years you may be closer to $100-$150 a square foot on your old insurance policy. There's no reason to be overinsured either, so talk to your agent to work on the current valuation. Things to look out for that may have changes since you first insured the house:
- Installed a backup generator
- Installed solar panels
- Put in a pool
- Updated the kitchen or bathrooms
- Bought some valuable personal items (guns, jewelry, art, etc)
Another thing to look at is "Other Structures" or Coverage B. This coverage is for a detached garage or shed and can often be very incorrect on your policy, the default amount is 10% of the value of the house but we have seen Carriage houses often worth 25% or more.
#3 Check the Insurance Company
Just because it was the cheapest option five years ago doesn’t mean it is the cheapest one now. Most Florida home insurance companies don’t offer the same long-time customer discounts that you get with auto insurance so there is usually no harm in shopping it. Like interest rates, insurance prices are frequently changing and getting in at the right time can make a big difference.
On the other hand, a select few insurance companies DO have incentives for staying with them in the form of disappearing deductibles (one of these companies is Frontline, who we highly recommend). Hurricane deductibles are enormously expensive due to the high-risk nature of our area, so getting that cost down takes some time.
It's not always about the annual or monthly premium, it's part of a bigger picture. A major insurance claim on your home may be a once-in-a-lifetime event for you, but your insurance agent works with claims on a regular basis. We see how claims get paid and we see which customers end up saving money in the long run.
So at what point would it be worth it to take a cheaper insurance company? See our recent article here about the benefits of disappearing deductibles and how it saves you money in the long run. But you get what you pay for, cheaper insurance can often mean lower quality because coverage sacrifices are often required to get the price lower. See our article here for more about choosing the right insurance company.
Here are the reasons you would go with the cheaper insurance-
- You don’t plan on living in the house long enough to see the benefit of the disappearing deductible.
- You are a weather god
- You prefer to insure worst-case-scenario risks and typically choose high-deductible plans anyway
- Your house is built really ridiculously well, like a bomb shelter
#4 Check Your Use
Insurance on these change all the time and insurance companies enter and exit this market like ants on an anthill. A big factor with these is the duration of the rental, is it rented with a 1 week minimum or is it nightly? There is no reason to pay for insurance if it isn't going to cover you so review what your insurance company allows for rentals.
I recently looked at one that was listed on the insurance policy as an owner-occupied primary dwelling but was actually a long-term rental; needless to say the insurance company would be more than happy to deny a potential claim based on that. Don’t let that happen, talk to your agent about making sure it is classified correctly.
You are not locked in to an insurance company once you purchase a house, you can change practically any time. An insurance agent can be a valuable asset and a strong relationship with one can help solve problems before they happen.