12 Insurance Hacks: A Cheat Sheet for Homeowners

Sep 24, 2021 | Personal Insurance

You probably heard it numerous times, owning a home is expensive. There are various expenses homeowners must pay to maintain and keep a home. American homeowners spend a huge part of their salary on the mortgage, property taxes, and homeowners insurance. According to the Census Bureau, the average cost of homeownership in Colorado is around $1,681 per month. Though most mortgage fees and property taxes are fixed, there are some things you can do to lessen your monthly expenses. These expenses may constitute a big chunk of every homeowner’s monthly budget. But don’t fret, there are some ways you can save on your monthly housing costs. You can use these 12 insurance hacks: a cheat sheet for homeowners to help you save some extra bucks. 

Homeowners Insurance Coverage

To get the best out of your home insurance policy, you have to understand what home insurance is and how it works. Homeowners insurance is a protection insurance company provides for homeowners. It covers damages to a person’s house and losses to assets inside the home. 

How does Homeowners Insurance Work?

A standard home insurance policy provides homeowners protection against different covered losses. A basic policy includes the following:

  • Dwelling Coverage

It covers damages to the home including attached structures like garage and porches. An adequate home insurance coverage must provide enough financial support to rebuild your home. 

  • Other Home Structures Coverage

Home insurance also covers stand-alone structures such as driveways, sheds, or fences. Insurers pay 10% of the dwelling coverage policy limit for repairing or replacing other home structures.

  • Contents Coverage

This insurance protects the homeowner’s personal properties. It covers the financial costs of replacing or repairing stolen or damaged personal belongings. Homeowners may receive 50%-70% of the dwelling coverage limit for personal property loss or damage depending on the insurance carrier. 

  • Personal Liability Coverage

Homeowner’s insurance policy also provides liability coverage. It covers bodily injury or property damage you unintentionally caused to other people. Coverage may range from $100,000-$500,000.

  • Additional Living Expenses

Home insurance coverage will also pay for temporary living expenses in case your house lost its use. Insurers may pay up to 20% of your dwelling coverage limit. 

  • Medical Payments

Homeowner’s insurance covers medical bills of visitors injured inside your property. It also pays the medical bill of third-party injuries you, your pets, or your family members caused outside your home. 

Types of Homeowners’ Insurance Policies

Home insurance comes in different types. Each type provides varied protection according to the type of house and protection needs.

HO-1 Basic Form Policy

Homes under this type of policy will receive actual market value payment if destroyed by covered perils. An HO-1 policy covers homes at their current market value. The inclusion of personal belongings coverage varies from insurance carriers. This type of homeowners policy only covers your house if it is damaged or destroyed by the following:

  • Fire or lightning
  • Wind or hail
  • Explosion 
  • Riots
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism
  • Theft
  • Volcanic eruptions 

HO-2 Broad Form Policy

This coverage provides payment for damaged house structures at their replacement cost. Insurers pay the actual cash value of damaged or stolen personal properties under this policy. It covers the same perils from HO-1 policy plus additional covered perils such as:

  • Ice or snow
  • Water damage
  • Freezing
  • Falling objects
  • Power surge
  • Accidental cracks or bulge

HO-3 Special Form Policy

This is the most popular type of home insurance policy. It provides broader coverage compared to HO-1 and HO-2 policies. Coverage for home structures is at replacement cost, while personal property coverage is at actual cash value. This policy only covers personal property with specifically named perils. This type of policy covers any damages resulting from any kind of home hazards except for excluded hazards stated in the policy. Most homeowners preferred this policy as they have an option to add endorsements. They can add the endorsement of replacement cost for personal property if needed, for an additional cost. HO-3 policy does not cover the following hazards:

  • Flood 
  • Earthquake
  • Nuclear accident
  • Sinkhole
  • Landslide/Mudslide
  • Neglect
  • Acts of war

HO-4 Contents Broad Form Policy

This policy is also known as renter’s insurance. It protects people renting an apartment, condo, or home. HO-3 and HO-4 provide the same protection against home hazards. The only difference is HO-4 only covers the renter’s personal property at replacement cost. Renters insurance also provides additional living expenses coverage if your house gets damaged by a covered peril. 

HO-5 Comprehensive Form Policy

This policy provides the highest level of protection for homeowners. The policy pays homeowners for home and personal property damages at their replacement costs. An HO-5 policy covers both home and personal belongings against all covered perils. It also offers a higher coverage limit for specific high-value properties like jewelry, art, and electronics.

HO-6 Unit-owners Form Policy

This policy is also known as condo insurance. It is suitable for people who are living in condominiums or housing co-op. Condo or co-op unit owners must secure HO-6 insurance as HOA insurance only covers the building itself and some shared areas. Condo insurance covers the following:

  • The unit walls, ceilings, and floors
  • Any renovations or improvements made after purchasing the unit
  • Personal property 
  • Personal liability 
  • Loss of use

HO-7 Mobile Home Form Policy

This policy protects different types of mobile homes. The coverage it provides is the same as the HO-3 policy. It is noteworthy that this policy only covers mobile homes when it is stationary. This policy doesn’t cover any loss or damage that occurs while the mobile home is in transit. Here are the examples of mobile homes HO-7 covers:

  • Manufactured homes
  • Mobile homes
  • Trailers
  • Sectional homes
  • Park model homes
  • Modular homes

HO-8 Modified Coverage Form Policy

This policy is suitable for homes that didn’t meet the standard of other home policies. Insurers typically assign this policy for homes with high-risk loss or damage. Older homes or homes needing significant improvements fall under the high-risk homes category. The coverage it provides is the same as HO-1.

12 Insurance Hacks: A Cheat Sheet for Homeowners

Here are some insurance tips you can use to lower your homeowner’s insurance premiums. These tips will make sure you get the best out of your home insurance policy.

  1. Review Your Home Insurance Coverage

Regularly review your homeowners’ insurance policy to ensure you have enough coverage. Make sure your policy limit is enough to rebuild your house in case it gets destroyed by covered perils. Underestimating your home reconstruction costs is one of the biggest financial mistakes you can make. Many factors influence the cost of rebuilding homes, thus it changes year by year. The increasing inflation rate and construction materials increase the cost of rebuilding homes. Secure a homeowner’s coverage based on the reconstruction costs to ensure your home is adequately protected.

How to Calculate Your Home Rebuilding Costs

It is important to accurately estimate your home rebuilding costs. Underestimating the cost of rebuilding your home can result in an inadequate insurance payout. Overinsuring your home replacement costs will lead to unnecessarily high premiums. You can get the rebuild value of your home from the following:

  • Mortgage Valuation Report
  • House Deeds
  • Surveyor’s Report
  • Building Cost Information Service
  • Buildings Insurance Renewal Documents
  1. Raising Your Deductibles

One factor that increases your homeowner’s insurance premium is your deductibles. Deductibles are the amount of money a homeowner agrees to pay in case of home repairs and reconstruction. If you’re a pro-active homeowner who can properly maintain a home, you can raise your deductibles to lessen your premiums. Just make sure you have enough emergency funds for home maintenance in case the need for home repairs arises. 

  1. Bundle Your Insurance Policies 

Bundling home and auto insurance policies from the same insurance company will give you discounts on premiums. Bundling your home and car insurance makes it easier to check if your coverage is enough and does not overlap with each other. Here’s the list of major insurance carriers that offer discounts for bundled policies. 

  • Progressive 
  • Liberty Mutual 
  • Nationwide 
  • MetLife
  • The Hartford 
  • Travelers
  • State Auto
  • Auto-Owners Insurance
  1. Boost Your Home Security

To lessen your home’s associated risk, boost your home security. Improving your home security can also save you some money on your insurance premiums. Insurance providers give discounts to homes with strong security. Your insurance agent can guide you on what you can do to improve your home safety and what insurance discounts they offer. Install your house with some of these security and alarm devices. These devices will protect your house from burglary and fire. Depending on your budget, you can invest in security and alarm devices such as:

  • Fire alarm system
  • Smoke detectors
  • Install fire extinguishers
  • Security camera
  • Home safes
  • Smart door locks
  • Video doorbells
  • Window or glass break sensors
  1. Eliminate High-risk Stuff

Insurance protects us from various risks and hazards present in our homes and surroundings. Removing high-risk stuff from your home significantly decreases the risks of accidents and damages. As much fun and exciting swimming pools, trampolines, and playgrounds bring, it adds serious safety risks to your household. Insurance carriers reward homeowners with less risky homes with premium discounts.

  1. File Claims Wisely

Insurance companies consider the level of insurance risk homeowners has in estimating home premiums. Insurers determine the associated risk homeowners have by looking at the number of claims they file. Frequent filing of claims poses you as a high-risk homeowner. Taking care of minor inexpensive home repairs will save you more money than paying higher premiums. 

  1. Shop and Compare Between Different Insurance Providers

Before your insurance coverage ends, shop and compare premium rates from various insurance providers. Shopping around will give you chances to score good insurance deals. To get the best possible home insurance deals, you can shop around and get information on different insurance providers from:

  • State insurance department
  • National Commission on Insurance
  • An insurance agency that partners with different insurance companies. Going to an insurance agency is more convenient.  It will save you more time as they provide complete quotes and coverage from various insurance carriers.
  1. Make Necessary Home Improvements

It is important to regularly check your house for wear and tear damages. Make necessary home improvements to avoid major home repairs. Proper home maintenance prevents expensive insurance claims that will surely affect your premiums. Check the condition of the following home structures and make home improvements if needed. 

  • Roof
  • Drainage
  • Air conditioning system
  • Heating System
  • Electrical Fittings
  1. Avail Other Insurance Discounts

Insurance carriers have reward programs to study consumer’s purchasing behavior. Insurers offer different types of discounts to attract new customers and keep the old ones satisfied. Shoppers can save a good amount of money from taking advantage of discount offerings. Ask your insurance agent about insurance discounts you may avail of. Examples of insurance discounts insurance companies offer:

  • Welcome discounts
  • Loyalty discounts
  • Newly bought home
  • Automatic bank payments of insurance premiums
  • Claims- free discounts
  • Non-smoker discounts
  • HOA Membership
  • Pay your annual premium, if possible. Insurance companies give discounts to homeowners who pay their premiums annually.
  1. Annual Review of Homeowners Policy Coverage

As your lifestyle and status change, so do your home coverage needs. An annual review of your homeowner’s policy prevents gaps in your insurance coverage.  As time passes, your personal properties slowly accumulate. You may also do some home improvements and additional building to your house. Your home location may be prone to natural disasters. Make sure your home insurance coverage is enough to protect your home inside and out. Insuring your house with adequate home coverage might increase your premiums, but it will save you a lot of money in case of theft, fire, or disasters.

  1. Maintain a Good Credit Score

Nowadays, insurance carriers look into the homeowner’s credit score in estimating insurance premiums. It is important to maintain a good credit record to get competitive premium rates.

How to Maintain Your Credit Record

  • Pay monthly bills on time.
  • Maintain zero to low credit balance if possible.
  • Stick with few credit accounts. 
  1. Get Insurance Policies from Private Insurance Providers

With the large number of private companies offering insurance products, competition is quite high. Insurance companies often give discounts to get more customers. Consumers can take advantage of various discounts to get lower premiums.

How Much Insurance Coverage Do You Need?

Various factors influence the amount of home coverage you need. Home insurance coverage varies from family to family. Consider the following factors in choosing the appropriate homeowner’s insurance coverage for you and your family.

  • Financial Capability

This is the most important factor to consider in determining how much insurance coverage you need. Premiums, deductibles, and emergency funds must be taken into account in choosing your home coverage. 

  • Type of Residence

There are several types of homeowners policies based on the type of residence you have. Get the assistance of an insurance agent in choosing the appropriate home coverage for you. Insurance agents can help you determine what and how much insurance coverage will suit you best. They can also properly explain the pros and cons of different home insurance policies and options to choose from.

  • Personal Properties

Consider the number of personal properties you possess in choosing how much home coverage you need. Make sure to choose a coverage that can cover most of your personal properties. 

High-value insurance

Do you own high-value belongings? Homeowners’ property liability coverage has a limit and is not enough to cover all of your personal properties. If you own these things, get high-value insurance to ensure the protection of your properties:

  • Expensive pieces of jewelry
  • High-end gadgets 
  • Art
  • Collectibles 
  • Musical instruments
  • Family Size

You must also consider the number of family members in choosing how much protection you need. Here are some policies you can add to your coverage to ensure adequate protection:

  • Higher Coverage for Additional Living Expenses (ALE)

If your home becomes unlivable and needs to be rebuilt, do you have funds to spend on additional food and hotel costs? You can add ALE on top of your homeowner’s coverage to help you pay for hotel and food costs.

Homeowners with pets must consider getting pet insurance for pets are also part of the family. Aside from liabilities your pet may cause, they can also get injured from accidents. Having pet insurance will ensure your pet will get adequate treatment with minimal costs. 

  • Home Location

As home insurance policies have limitations and exclusions, you must also consider your home location. If your location is prone to natural disasters, secure the appropriate additional coverage depending on your home needs. 

Examples of Natural Disaster Coverage

  • Flood Insurance
  • Earthquake 
  • Wind and Hail
  • Wildfires

Buying a home is one of the best and worthy life decisions you can ever make. Having your own home will not only give your family comfort but peace of mind as well. Choose a home insurance policy that will provide adequate home protection for you and your family. An adequate home insurance coverage will save you from unexpected financial expenses in the future.

We can help you with that

We help you find and customize home insurance products to meet every homeowner’s needs. Give us a call now and let’s discuss how we can protect your home and your family.