January 3, 2012 — For baby boomers who decide to retire on one of the coasts, the cost of home owners insurance can turn out to be a most unpleasant surprise. Worse, these costs can escalate from year to year and provide a threat to your happy retirement. In this article we will review some of the top things you can do to both reduce your premiums and prevent them from escalating out of control in the future. You are not powerless to accept premium increases, if you are pro-active.
1. Talk with your agent. Your agent, if she is a good one, should be able to provide you with some suggestions for reducing premiums (more about those later). You might have to document that you have followed up on those suggestions. Tell the agent you are about to take step #2 (below) – that alone might bring in some pencil sharpening. Many condo and Home Owners Associations have been able to keep their insurance costs level by working closely with their insurance companies – you could do the same.
2. Shop around. True, many states with frequent natural disasters have seen a reduction in the number of companies providing coverage. But by getting bids from more than 1 company you will see how the premiums might differ, as well as get ideas about how you could change coverages to save money.
3. Increase deductibles. Most experts agree – low deductibles are a money-maker for the companies. Take on as much risk as you can by self-insuring, and save money.
4. Make improvements to reduce your home’s risk. Find out what improvements would reduce your premiums the most. Then act on the most cost-effective ones. Those with the best return are hurricane shutters, security and alarm systems, fireproof materials, better electrical systems.
5. Consolidate your policies. Most insurance companies will offer you a discount if you have your auto and home owners policies with that company. One company, State Farm, actually offers the reverse in Florida – it gives some auto policy holders a discount if they will move their home owners to the state-backed Citizens insurance company.
6. Move to a lower risk area. While this might not be your favorite option, if saving money is very important to you in your situation, consider moving to an area which has a lower risk of natural disaster. That might mean moving from being close to the coast to a town more than 5 miles from the coast. Your insurance agent might be able to help you with estimated costs for new towns or neighborhoods you are considering.