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Wednesday, September 10, 2003 Homeowners need smart insurance tactics When you buy a home with a mortgage you're required, by the lender, to purchase a homeowners insurance policy. But exactly what's in that policy is often vague to buyers who are preoccupied with family moving issues. In the flurry of activity that accompanies settlement there may not be enough time to delve deeply into the details of the homeowners insurance they're buying. But, after the dust of moving in has settled it's a good idea to sit down and scrutinize that insurance policy. "Homeowners should use smart tactics that allow them to get the most for their premium dollars," says Richard Roll, president of the American Homeowners Association. "Smart homeowners insurance tactics include knowing the pitfalls to avoid, as well as the right steps to take." What does a homeowners policy include? In a nutshell, this type of insurance is a two-part package that protects the property itself against damage, plus a liability component that provides coverage for any legal fallout resulting from injury to others caused by your family. Simple enough. But, embedded in that simple-sounding insurance policy are a lot of options and myriad questions to be answered in order to design the right policy for your specific situation. Where to begin reviewing the homeowners insurance? First, do the basics.Be sure you have a home inventory. Too many homeowners fail to create this all-essential documentation of their possessions for insurance purposes. Without it, you'll be unable to verify any losses for tax purposes. Your claims will take longer to settle. ÊWorst, you will probably not be carrying the right amount of insurance in the first place. Next, be sure you have enough coverage but not too much. "One pitfall to avoid is overvaluing your home and buying more insurance than you really need," advises Roll. "Owners sometimes make the mistake of using the purchase price of their home, which includes the value of the land, instead of the replacement cost for the structure, to establish their coverage amount. That's a big mistake." Updating the policy annually is another important tip, says Roll. Coverage needs change more often than you may think. When you make home improvements; when a family member moves away; if you start a home business; are all changes that affect your homeowners insurance needs. In some cases you may need additional coverage. In others you may need less. Actively looking for ways to reduce premiums can really pay off. Talk to your insurance agent about discount opportunities. ÊSometimes making a certain type of home improvement can bring reduced rates. Increasing your deductible to $1,000 can reduce your premiums as much as 25%. Some companies offer discounts to retirees. ÊShop around and compare prices. Then, talk to your agent and see if the company you're currently with will give you a discount to stay with them rather than watch you take your business elsewhere. For more information on homeowners insurance go to http://www.ahamembership.com/aha_side_insurance_tactics.cfm. For more information on any aspect of buying and owning a home go to www.ahahome.com, the website of the American Homeowners Association (AHA)®.
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