If you haven’t shopped for homeowners insurance coverage in the past few years, do so now. Most homeowners in the Twin Cities area can save more than $500 per year by switching from their current insurance company to a lower-priced one. Some will save more than $1,500.
Researchers from the nonprofit Twin Cities Consumers’ Checkbook collected annual premiums for a sample of policyholders from companies that write nearly all of the area’s homeowners insurance and found that costs varied widely from company to company. For example, a sample Hennepin County family (a three-bedroom, two-bath bungalow/side home built in 1977 with 1,680 square feet of living space and a replacement cost of $450,000) would pay $1,527 annually with auto owners, $1,679 Owners with Safeco, $1,895 with Liberty, compared to $2,927 with American Family, $2,982 with Hippo, $2,991 with Electric, or $4,342 with Amica. Apartment owners and renters will also save money by shopping around for better rates.
To help you find a low-cost, high-quality company, Star Tribune readers can access Checkbook ratings of homeowners insurance companies for free through February 5 at checkbook.org/StarTribune/homeowners.
Pricing methods and premiums can change significantly over time, so shop around for a better rate at least every few years. And if you’re thinking about switching insurance, you are no You’ll have to wait until your policy expires to do this: Although you may have to pay a small administration fee to cancel your current insurance, these fees are usually much less than the savings you’ll get from a low-cost carrier.
Even if you choose a low-priced company, don’t waste hundreds of dollars a year purchasing the wrong coverage.
Take a high deductible. You’ll get a significant discount, and it will make you less likely to file small claims that could result in higher premiums in the future. Keep in mind that the purpose of insurance is to protect you from losses that you cannot afford on your own.
Get an accurate estimate of what it will take to rebuild your home. Many homeowners do not maintain adequate insurance coverage, leaving themselves financially vulnerable in the event of a total loss. Don’t rely on your insurance company to update your homeowners policy.
Limit the number of claims you submit. Filing a claim will result in higher premiums from most insurance companies and may cause the insurance company to drop you – which will make it difficult and more expensive to get insurance elsewhere.
Maintain a good credit history. In Minnesota, businesses are allowed to use credit scores to determine their rates. In some companies, the bad credit penalty more than triples their insurance premiums.
Consider declining optional higher coverage limits and other add-ons. Raising the limits for some types of coverage — such as liability coverage — won’t increase your premium much, and most consumers find the extra protection worth it.
Consider purchasing homeowner’s and car titles from the same company. Many companies offer dual policy discounts to customers who insure their homes and cars with them.
Keep in mind that what you get for basic coverage is especially important if you own an older home, as you may want to make sure expensive features like woodwork are properly covered. Standard policies promise to repair or replace what is damaged, but not to pay for an exact replica of what was lost.
No matter which company you choose or the coverage you select, you’ll want a company or agent that provides unbiased information and quotes accurate rates. Unfortunately, Checkbook researchers often found that many agents are interested in selling a lot of insurance and junk options rather than providing solid advice and reliable quotes.
Document your home’s features and keep the list up to date. If you make improvements, report them to your insurance company immediately. Take photos or videos of your property and keep this information in a safe place away from your home.
Twin Cities Consumers’ Checkbook magazine and Checkbook.org are a non-profit organization with a mission to help consumers get the best service and lowest prices. It is supported by consumers and does not take any money from the providers it rates.