There are several ways in which a homeowner can improve their house to simultaneously boost resale value and reduce insurance costs. The addition of certain features can mitigate risks for a variety of extenuating circumstances. Those who take precautionary steps to reduce adverse events are therefore more appealing to insurance companies and more likely to receive discounted premiums on homeowners insurance rates. It is imperative for the average homeowner to receive credits they are entitled to, as every bit of savings represents one step towards financial independence.
As millions of Americans look for ways to stretch their budgets and survive these tough economic times, too many are neglecting to utilize all of the discounts that may be available to them. According to a national survey conducted by Trusted Choice, representing 53 million households, over 34 percent of respondents were unaware of the homeowners insurance discounts they were missing out on. Many simply did not know about several options they had to consider.
Unfortunately, those that would benefit the most from reduced homeowners insurance rates are not taking advantage of them. Approximately 38 percent of those involved in the survey, with a household income below $25,000, have neglected to take advantage of certain credits.
Survey responses revealed that 26 percent of those involved are currently saving approximately 6-10 percent on their insurance premiums by using discounts already made available to them. In reality, many consumers could be saving an excess of as much as 30 percent. So how can you be sure to capitalize on all of the homeowners insurance discounts that are currently made available?
The following illustrates many of the homeowners insurance discounts that consumers often fail to take advantage of:
Gated communities mitigate risk and present homeowners with lower rates of theft, vandalism and crime. The presence of added security has the potential to deter any malicious activity and should be taken advantage of whenever possible. Those who do may become the recipient of added insurance benefits. Many home insurance policies are able to credit their holders within gated communities, as they are less likely to file a claim.
Those fortunate enough to belong to a gated community may reduce their monthly premium by as much as 20 percent.
“That definitely falls under loss mitigation,” says Sean Meehan, second vice president of property strategy and design for Travelers Insurance. “If you live in a gated community, it’s a lot less attractive to a thief than a place that doesn’t have that security.”
The geographical region in which you reside also plays a significant factor in deciding homeowners insurance rates.
“If you live near your local fire department in a safe, quiet, easily accessible neighborhood, your homeowners rates might be lower than if your home is located off the beaten path,” says Meehan. “Your home may cost more to insure if you are many miles from the nearest fire department.”
According to the U.S. Fire Administration (USFA), electrical complications result in 67,800 home fires, 485 deaths and $868 million in property losses every year. Those numbers are approximately two times higher than fires started by electrical appliances. Properly wiring a home can therefore reduce your insurance premium while protecting your family and assets.
Insurance providers gravitate towards those who take the necessary precautions in preventing accidental fires. A ten percent discount may be applied to an individual’s insurance premium if they provide proof of new wiring instillations. Reason being, new wires are less likely to default and contribute to accidental fire statistics. “New wiring, if it’s installed right, is much safer and less likely to cause any type of outages, shortages or fires,” says Meehan.
Impact Resistant Roofing
The condition of a roof is one of most influential factors when determining monthly homeowners insurance discounts. The material of the roof will determine whether or not you are eligible to receive credit for your roofing investments. Depending on the region in which you live, substantial credits may be given to those with Class 4 roofs.
Once compromised, poorly assembled roofing fixtures may result in significant structural damage. Exposure to the elements can become an unwelcome burden and further deteriorate the quality of the structure. Therefore, it may come at no surprise that higher quality roofing materials can drastically reduce your monthly premium.
As more impact resistant roofing materials become available, companies have been increasingly willing to offer homeowners insurance discounts. Of particular interest to insurance companies, are roofing materials that have received a Class 4 rating. They can significantly reduce further damage to a home in otherwise poor weather conditions.
“Insurers definitely are giving discounts for Class 4 because, if your roof blows off in a rainstorm or nor’easter, the water damage is going to be substantial, resulting in a much larger claim,” says Meehan. “They definitely want you to protect yourself against that.”
Some insurance providers may promote rate reductions for those affiliated with homeowners associations (HOAs). Belonging to an HOA provides insurance agencies with an additional sense of security, as they serve to mitigate unexpected risks. Much like living in a gated community, HOAs can deter any potential malicious acts against your home.
“I’ve heard that it’s because of the security aspects of HOA communities, with things like community watch,” says Madelyn Flannagan, vice president of agent development, education and research for the Independent Insurance Agents & Brokers of America. “Plus, people may have to maintain their home in a certain way in order to meet the requirements of a homeowners association’s restrictions and covenants.”
Additional security, in association with maintenance requirements, will reduce the risk of anything bad happening to a home. Those associated with an HOA may be entitled to premium reductions as high as ten percent.
New Homes & Renovations
Contradictory to what many people may think, new homes that have recently been renovated may qualify for additional savings. Consumers can find the best home insurance for new builds and homeowners insurance credits if their house is new or renovated. The theory behind such a credit lies in the quality of the materials that comprise the majority of the house. Recently installed pipes do not exhibit a propensity for leaking and new wiring doesn’t start fires. Therefore, new homes and those that have recently been renovated are likely the beneficiaries of several homeowners insurance discounts.
“We offer homebuyer discounts,” says Meehan. “The logic behind that is, you’ve had it inspected by a professional and a lot of times they’ve detected — and you’ve arranged to have an electrician fix — all those wiring issues. Usually, when you buy a new or even an existing home, that loss mitigation has been done because of the inspection process. It gives us a better understanding of what’s going on in that home.”
While the smoking population is in rapid decline, cigarettes remain the number one cause of home fire fatalities in the United States. According to the USFA, smoking caused 18,900 residential fires in 2007, killing 595, injuring 1,200 and causing $327 million in residential property loss. These statistics have caused insurance agencies to scrutinize those who indulge in such habits.
Households with a known smoker will likely experience a raise in insurance premiums. By comparison, those homes without a smoker may be subject to receive additional discounts, as they pose less of a threat to the safety of the structure.
“With home insurance, it is one of those underwriting questions that does provide a credit for some policies in some states. It’s not a rating tier, however; you don’t go to a nonsmoker rate for home insurance the way you do with life insurance,” says Flannagan.
Homeowners insurance discounts may be distributed to those who equip their property with designated protective devices. Certain locations may even be more inclined to benefit from specific protective devices. Those houses in areas associated with high crime rates will see a premium reduction with the addition of devices that prevent crimes. Deadbolt locks, wrought iron bars and security systems can each help reduce the risk of an unwelcome intruder. According to Allison Kade from Fox Business, “insurance companies price your premium based on how much risk they foresee, so you can reduce the premium by reducing your liability risk, thanks to some smart preventive measures.”
Similar steps may be taken to protect your house from more unexpected incidents. As a result, the use of sensory equipment has become increasingly popular. Homeowners may install carbon monoxide detectors, smoke detectors, sprinkler systems, heat detectors and even moisture detectors to reduce the risk of potentially dangerous situations. With these measures in place, the home is less likely to fall victim to unexpected phenomena.
Some insurance providers offer up to eight percent off their monthly premiums for those who take these steps in protecting their assets.
The following is a list of additions that should be considered when trying to receive your homeowners insurance discounts:
- As a result of the economic downturn, insurance providers are reevaluating their rating models. Changes may allow customers to save money by applying for a new policy from the same provider.
- Married couples should take advantage of the individual with a better credit score. Homeowners insurance discounts are calculated by the primary account holder’s credit score.
- Homeowners that have not filed a claim in ten years may be eligible for a 20 percent reduction on their premiums.