BIRMINGHAM, Ala. (WBRC) – Data shows on average, Americans are paying 6% more this year for homeowners insurance over last year, and that’s on top of years of annual increases.
“It’s a really hard time right now,” said Shannon Martin, Insurance Analyst, Bankrate.
Martin worked in the insurance industry for 16 years and is now sharing insider knowledge on the best ways to lower insurance premiums.
She attributes the increases seen nationwide to inflation driving up the costs to repair damage or rebuild, and massive claims payouts by insurance companies.
“Alabama gets a lot of that extreme weather damage and that is going to impact the rate of your policy.”
Bankrate’s insurance analysts found the average annual premium in Alabama is $2,745, $460 higher than the national average. That figure is for a home with dwelling coverage of $300,000.
The dwelling coverage is the replacement cost, or how much an insurance company estimates it will have to pay to rebuild a home in case of a total loss.
That coverage can be adjusted, and Martin said it’s one way to save money.
“Maybe you’re comfortable with it being a little lower, knowing you could pay something out of pocket if you were to have a loss, but some people take off as much off as they’re allowed,” explained Martin.
Most mortgage companies require insurance coverage of at least 80% of the rebuild cost. Martin cautions against going that low, because “you might not get replacement costs, you might get actual cash value in the event of a total loss, which means you can’t afford to rebuild your home.”
Another option to save is to increase your deductible.
“It can be $500, $1,000, $1,500, $2,000 – so you can get a quote for different levels until you find one that maybe works for you a little better.”
Going up to $5,000 or $10,000 would mean even greater savings on your premium, but Martin says if you take that route, make sure you have that much money in your emergency savings.
After reviewing coverage and the deductible, Martin said to ensure you’re getting every discount you’re eligible for.
Discounts are available for the age of your home, age of the roof, having a security system, having good credit, signing up for autopay, and policy renewal, to name a few.
Martin suggests asking your insurance company for a list of available discounts.
She also said it’s best to overcommunicate with your insurance company, especially when it comes to repairs you make to your home, and even if the repairs were made through a claim.
“You do need to check with your insurance company to make sure the service department is accounting for that new … discount.”
Martin said most repairs or changes that result in significant discounts are expensive, like a new roof. She advises checking with your local municipality to see if grants are available to make these repairs.
“I always tell policy holders that insurance policy is a backup plan, not the plan, it’s supposed to be there when damage happens that is too expensive for you to handle on your own. So having a bunch of little claims because you have a $250 deductible, that’s just as negative as having one big claim.”
Routine home maintenance is another way to save because it lessens your chances of filing a claim, said Martin.
“So, before each season, make sure you take a peek at your roof. Before winter, make sure you check your fireplace, have your heater checked, make sure you’re keeping debris away from your home, check your gutters, having quality gutters and free from debris will help you save your roof from being damaged.”
She added, “Make sure water flows away from your home instead of puddling up around your home. That can easily help from minor flood damage.”
Shopping around is always an option, but Martin cautions against making a change when the savings are slim.
“People are shopping, the question is, how much savings are they getting? And when policies are this high, sometimes we save $50 and we’re excited. One thing I want homeowners to remember is you may have built up some renewal discounts with your current carrier, and once you leave, you can’t get those if you decide to come back.”
Lastly, Martin advises you get rid of “attractive nuisances” – trampolines, swing sets and pools will increase your premium.
Adjusting your policy to find meaningful savings will take a lot of time, phone calls and double checking. Martin cautions against using an app, and encourages you to talk with your insurance company.
“We need to start having more relationships with our agents explaining where we are financially, explaining what we need from them, what we need from our policy.”
Get news alerts in the Apple App Store and Google Play Store or subscribe to our email newsletter here.
Copyright 2024 WBRC. All rights reserved.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.