Real Estate Report: Three Helpful Hints to Save on Homeowners Insurance

Homeowner’s insurance is a necessity if your home is mortgaged, and this type of insurance covers the structure of your home and your personal property, as well as your personal legal responsibility (or liability) for injuries to others or their property while they're on your property.

The majority of homeowners own their homes with a fixed rate mortgage, and they count on a fixed monthly mortgage payment. But, two things can cause that payment to change: taxes and insurance. In the case of homeowner's insurance, many homeowners are seeing increases in their monthly payments due to annual policy renewals being increased enough to cause their monthly mortgage payment to rise.

Here are three helpful hints that could help you save on your homeowner’s insurance:

1. Talk to your agent once a year—

It’s a good practice to call your insurance agent each year to review your policies. As your annual renewal bill shows, insurance companies have been hiking rates to cover losses incurred during these tough economic times. But, competition is still fierce for new customers. It’s worth the effort to see if switching companies can help you save.

And, look into bundling your homeowner's insurance policy with your auto insurance. This alone can save you approximately 5-15% in premiums.

2. You may have too much coverage—

Check your policy to make sure you aren't carrying more replacement coverage than you need. Some policies contain an "inflation protection" provision that automatically increases your coverage annually, but due to a decline in construction costs, you may not need as much coverage as you are currently paying for. Speak with your insurance agent to see if you can adjust your coverage amount to a more realistic number, and the savings can add up to as much as 10% off your premium.

3. Small claims can cost you in the long run—

"Filing a claim for every leak or broken window can cost you in the long run—raising premiums as much as 10-15%," says Amy Hill, an insurance agent with Associated Insurance Centers, Inc, in West Ocean City. By switching your policy to a higher deductible, and banking the savings to cover the cost of minor repairs, you can save up to 25% off premiums in some cases. It's always a good idea to discuss any claim with your agent before contacting your insurance carrier directly—they have the knowledge to help you decide whether the claim is worth filing.

Also keep in mind, just as a lender will pull a credit report before approving you for a loan, insurers will research your past claim history with national databases such as Comprehensive Loss Underwriting Exchange (CLUE). And, just as a credit report may contain errors that will lower your credit score, these insurance databases can contain errors as well that can negatively affect your pricing. You can receive your insurance report free during each 12 month period by visiting personalreports.lexisnexis.com.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.