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This might sound strange to you if you have spent the money on putting an insurance policy in place, but there are times when you should consider not making a claim. It really can protect you from greater losses if your premium rates suddenly rocket up or, worse, the insurance company decides it would prefer you to take your business elsewhere. So let’s take it one step at a time. Almost every policy imposes a duty on homeowners to make claims either within a set time or a “reasonable” time. If you miss out on a time limit, you have no right to claim. When is a claim made on a “timely” basis? You will be expected to notify the insurer of a theft or vandalism within days. Reports of serious damage will be expected within two weeks and certainly never longer than 30 days. This can put you under pressure if the policy requires you to get estimates from local contractors, but no-one ever said a policy was going to be worded in your favor. So, if you have reliable estimates of the amount lost and/or costs of repair, now comes the big decision.

As a general rule, you should only make claims if the amount is greater than the deductible. If you are going to pay out of your own pocket in any event, silence will benefit you in most cases. However, be careful if there is a third party liability element involved. Suppose the wind lifts two or three roof tiles and one blows down into the street, hitting someone on the sidewalk. The cost of repairing the roof may be small but the risk of a major claim for personal injuries cannot be ignored. Always make a claim when you cannot put numbers on a possible third party claim. Now comes the difficult part. Every time you make a claim, it’s recorded in a national database called the Comprehensive Loss Underwriting Exchange (CLUE). If you make multiple smaller claims, or one or two large claims, this will stay in CLUE for seven years and may deter other insurers from writing a policy for you or encourage them only to quote high premiums. You should therefore consider absorbing losses up to $3,000. You may be lucky – the insurer pays your claim in full and does not raise the premiums. But suppose you have a deductible of $1,000 and the insurer raises your premium for $500 for the next two years. You never know the real costs of the claim until after the event but setting a higher minimum amount for a claim gives you a margin of safety. You should at least break even on the smaller claims. Read the rest of this entry »

When you are looking around for a house to buy, the cost of home insurance is not always the most important thought on your mind. Even if you do think about it, the most common consideration is the state of repair and how easy it would be to repair or rebuild should there be a fire. This confidence continues when buying the insurance policy. You sign up for an all-perils policy and take the words at face value. If you are insured against all perils, that surely means you can sleep peacefully at night. Except that confidence is too often misplaced. Looking around the US right now, it’s one of the coldest winters on record with heavier snow fall than usual. When the weather warms, the melting snow will flood into the rivers… That’s a joy to come. So let’s list the most common events that damage your home: landslides, subsidence, floods, hurricanes and tornadoes. Live in the wrong states and we add earthquakes. Now take out your policy and check that exclusion clause. You will see some mysterious phrases like “surface water”. That excludes every possible source of water no matter whether it comes in as a high tide, wind surge, rain or local sewage drains backing up. When you add up everything not included, even the top-of-the-range policies from the supposedly best insurers often end up as covering rebuilding costs from fire and wind only – that’s wind and not tornadoes or hurricanes.

To protect yourself, you need to start early in the buying process. Start with simple questions: has there been any accidents in this area? Is there a heavy clay content in the soil? Is this an earthquake zone? If the answer to any of these questions is yes, you should get a geology report before going any further. Mining subsidence is a real problem in some areas. Soil that expands when wet and contracts when dry can wreck the foundations of your home – the Department of Agriculture estimates that up to 25% of properties in the US are at risk of damage. We all know about earthquakes. If your proposed property is on a slope, what’s the risk of a landslide or rock fall? When we move on to flood risks, every community is at risk – check out the addresses of potential properties through http://www.floodsmart.gov/ which is run by Homeland Security’s FEMA. It also gives you estimates of the likely premiums for areas at higher risk. Read the rest of this entry »

When a person decides to get insurance for his or her house, it’s certainly a cheap policy they are looking for. And by cheap we mean having a low price for the largest bundle and amount of coverage possible. And to much surprise, it is really possible if you know the rules of the game.

But what are the rules, you might ask? While there are many hidden stones in such a complex industry as insurance, there are certain guidelines that you will find very useful and effective when choosing a new policy or looking to switch you current home insurance provider. So here are the essential Dos and DON’Ts of home insurance that would be very wise to follow:

DO: Find an online service that will allow you to get quotes from multiple home insurance providers, necessarily licensed in your area of residence.

DON’T: Buy the first policy you are offered with when shopping.

DO: Contact an insurance agent in person to tailor your policy and make sure you’re getting the best and most adequate coverage for the money you pay.

DON’T: Drop home insurance or necessary types of coverage altogether just to lower the costs.

DO: Review your deductibles and adjust them if needed to relate adequately to your financial abilities if an insurance situation takes place. Remember that higher deductibles will eventually lower you rates.

DON’T: Raise your deductibles to the amount you will find hard to pay in case it comes to filing a claim.

DO: Speak to your insurance agent to learn if there are any homeowners insurance discounts provided by your insurer you are eligible for.

DON’T: Forget about updating your insurance coverage after adding square footage to your house, performing important modifications (installing ventilation or security systems), or buying expensive things that are to be kept on your property.

DO: Find a provider that will carry more types of insurance rather than only homeowners insurance, for you can receive substantial discounts if having your auto, life, health and home insurance policies with the same carrier.

DON’T: Drop substantial amounts of liability coverage in order to save money because some day it can be really helpful and your savings can lead to serious losses if you do not have enough liability coverage.

DO: Renew your policy and avoid cancellations because it will get more expensive to renew it or get a new one if your policy was simply void without any reason. Read the rest of this entry »