Glen Mulready: Trim your home insurance costs before renovation or construction begins

Homeowners insurance premiums are rising throughout the country due to catastrophic storms, reinsurance costs and inflation, among other factors.

Construction costs are also climbing, with spending on private residential construction climbing to $872 billion in September 2023 from $866.6 billion in August, according to the U.S. Census Bureau.

Given the current insurance market and high construction prices, I think now's the time to talk about lowering insurance premiums when building a new home or renovating your current one.

Before diving in, it is critically important to understand the difference between actual cash value and replacement value.

Replacement value coverage pays the cost of replacing your damaged property or home, including materials and labor needed to rebuild, while actual cash value coverage pays replacement cost minus depreciation.

If parts of your house are old or in poor condition, like your roof, they might only be eligible for actual cash value. A new roof would often qualify for replacement coverage.

Regardless of if you're renovating or building, you will need to make sure your current or future policy provides adequate coverage. With that said, here are three ways you can save on your premium down the road.

Use strong building materials

A big way to save on home insurance premiums is using fortified materials. Structures built with brick instead of wood will result in lower premiums.

Additionally, some companies offer lower premiums to homes built with class 3 or 4 shingles and other roofing materials, which are more impact resistant.

Many companies will give a 25% discount if you have class 4 shingles. Reach out to your insurance company when renovating to see what building materials are eligible.

If you're considering building your home, research insurance companies and look for recommended materials to incorporate into your construction plans.

Make your home more disaster resistant

When building or renovating, making your home more resistant to disasters can help lower your premium. If you're renovating, this includes reinforcing your roof to protect it from hail or heavy snow and ice and installing storm shutters to protect against strong winds.

Additionally, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. If you're building, make sure you are using the most up-to-date materials and methods in these areas.

Install additional security and warning systems

Increased security can help lower premiums since theft or break-ins are less likely. Some lower-cost options include installing deadbolts and new smoke detectors throughout your home or construction.

If you want additional help in this area, think about purchasing an advanced home security system that includes an alarm.

Some insurance companies lower premiums for homes equipped with smart home technology, like security cameras, remote lighting and access controls.

Check with your insurance company to see what technology qualifies your home for discounts.

With rising costs to build and insure homes, consumers are looking for ways to save money. By thinking about your construction or renovation plans from a risk mitigation perspective, you can save money on your home insurance premiums.

Always remember that the Oklahoma Insurance Department is here to help if you have questions or need to file a complaint against your insurance company. You can visit our website at www.oid.ok.gov/consumers or contact our Consumer Assistance Team at 1-800-522-0071.

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