There's nothing wrong with wanting to save a buck or two where you can, but scrimping on your homeowners insurance premium might not be the best idea.
"A lot of times, clients are so focused on price that they don't understand what they have given up in return for the lower premium," says
- How much is homeowners insurance?
According to the
The price of homeowners insurance is partly based on the cost to rebuild the structure, not the price you paid for your house. For example, if you paid
Of course, include coverage on your home's contents, liability and a possible umbrella policy, your total annual cost will increase.
Other factors that determine the cost of your premium include: size and age of the home, past claims history and whether it has a security system and fire sprinklers. Purchasing multiple policies with the same carrier sometimes reduces the price.
It's important to remember when comparing average premiums that it's an imperfect measure of the relative "price" of insurance due to wide variations in hazards, economic conditions and real estate values from state to state. Even when comparing identical policy forms and amounts of insurance, premiums for homeowners coverage can differ dramatically across the country.
- How much is an insurance deductible?
Your insurance deductible represents a shared risk between you and the insurance company and can be either a specific dollar amount or a percentage of the total amount of insurance on a policy. Regardless, the deductible is your out-of-pocket expense on every claim, and most range between
For example, if you have a
A deductible is calculated a bit differently if it's based on a percentage of your home's insured value. For instance, if your house is insured for
"Currently, the most common deductible that we see and write is
"There is a commensurate premium adjustment with the higher deductible, but many people just don't feel comfortable with the higher deductible and they shop for other options."
Deductibles are paid with every insured loss -- there is no "annual maximum" in which the homeowner wouldn't have to pay their part. However there are exceptions, especially in hurricane-prone areas, where homeowners typically have two policies -- one to cover hurricane damage, and one to cover everything else. The hurricane policy deductible is applied to all of hurricane season rather than for each individual storm.
Whichever policy and deductible you choose, it's important to review each line of your policy and make sure you understand exactly what your coverage provides.
"Don't think everything is automatically covered, which of course it is not," says