Christmas is over, but the bills might not all be gone. Plus, Uncle Sam is going to want his kickback, that’s taxes to you and me, by April. Throw in a recession, and it is probably a good idea to look at saving some money.
If you’ve been through your budget and you don’t find anything out of whack (tip: if your cell phone bill is more than $60 and you aren’t a traveling salesman, it’s time to re-evaluate) then we need to pull out some less used tips.
Homeowner’s Insurance Deductible
The dirty secret about homeowner’s insurance is that filing claims will get you and your policy dropped by the insurance company. Those same claims will keep you from getting a new insurance policy with another company. Sometimes, as little as 3 claims in 2 years will get you dropped like a hot potato.
Since there is nothing you can do about how insurance companies behave, the next best thing is to work smarter within their system. Only file large claims and use your savings to pay for the nickel and dime stuff like a few shingles blown off the roof. Of course, if you aren’t going to be filing smaller claims, then you shouldn’t be paying for the coverage.
Raise your homeowner’s insurance deductible to at least $1,000. Chances are a $1,500 or $2,500 deductible won’t lower your rates that much more, but check anyway. Saving $10 a year to raise your deductible $1,000 doesn’t make much sense, but if you can save $50 or $100 then that’s something to think about.
If you are the very responsible type and you have the recommended 3 to 6 months of living expenses tucked safely away in an emergency fund that you never touch, you can even consider a $5,000 deductible which could significantly lower your home insurance. But, do the math first. It will likely only make sense if you have a high value home.
Also, do a homeowner’s review with your company if you have made any improvements or security upgrades. The new alarm system might be worth a discount. The same goes for removing anything that raised your rates. If you don’t have a dog anymore, make sure they know that too.
Be careful that your insurance agent doesn’t use your review to sell you other insurance, or even more home insurance. You are there for home insurance only, and you don’t want to talk about life insurance, car insurance, or any other insurance, no matter how good of time it is, or how great the deal is. You especially don’t care if rates are going up next month (a common insurance salesman line).
Also, there is no need to insure your home for full replacement value. Laws very from state to state, but generally, a homeowner’s insurance policy provides for 120% or so, of coverage should your whole house need replaced. But, that kind of event is relatively rare. Even if you have a fire, chances are you’ll be repairing the house, not rebuilding it from scratch.
A major mistake many homeowners make is not getting flood insurance. Your regular home owner’s insurance does not cover flooding. That includes not just a river flooding, but also a water main break, a broken pipe (outside the home), and many other issues. If you live anywhere near a river, lake, or ocean, flood insurance is a no brainer. But, don’t assume you are safe if you don’t.
Check your city planning office to find out where your home is located. Residentially zoned areas are generally categorized by flood plain status. If your home sits in a 100-year flood plain, you might risk it. But, don’t assume a 50-year flood plain equals safety. The statistics don’t quite work that way. Check with an expert.