Homeowners insurance can be an expensive investment and if the homeowners insurance policy is not structured to your benefit, you will find very few claims that actually pay off for you over the long run. There are two types of homeowners insurance policies that I have invested in and saved a lot of money by knowing which questions to ask up front when purchasing the policies or filing a claim. These experiences helped me get the most from our homeowners insurance.
Homeowners Insurance Policy ‘” Type 1: Homeowners Warranty Insurance
I Saved A Total of $14,000 in home repairs the first year we owned our home by investing $465 in a one-year Homeowners Warranty Insurance policy!
A real estate agent or a home seller usually offers this type of homeowners insurance when you are buying a house. This type of homeowners insurance policy usually costs between $400 and $600 for a year of coverage on all major appliances and household maintenance that is not covered under a homeowners liability policy. We invested in this type of homeowners insurance because the home we bought was older and things like the central heating and air system was old, the pool pump and filter were old, or the faucets, toilets, and other fixtures appeared old and worn. We bought a 15-year old home and in the first year, the air conditioning unit went out. We paid $100 deductible to the Homeowners Warranty Insurance company and they installed a brand new $12,000 air conditioning unit for our two-story home.
We also saved money on this homeowners insurance because we stacked multiple items onto one claim and paid only one deductible to have several like items repaired by the same contractor. For example, we put all the plumbing repairs for faucet leaks, toilet flushes, and showerhead drips onto one claim and paid only one $100 deductible to have all the plumbing items fixed within the first year. That saved us hundreds more dollars for our $465 homeowners warranty insurance investment.
Homeowners Insurance Policy ‘” Type 2: Homeowners Liability and Property Damage Coverage
A $10 per year jewelry rider allowed me to recover over $1500 for jewelry that was stolen during a home robbery.
Bundling all my insurance policies with one agent and building a trusting relationships with my agent helped save me hundreds of dollars in premiums and claims.
In one case of water damage, we saved money by fixing the problem ourselves instead of filing a claim that could result in our entire homeowners insurance policy being cancelled.
This type of homeowners insurance is usually folded into your house payment and is required by most mortgage companies who hold the title to your home until it is paid off. A very general rule of thumb for these homeowners insurance policies is the cheaper your monthly premium, the less coverage you have for unexpected events. Insurance companies that offer homeowners policies typically offer “riders” that cost extra money for things like jewelry theft or loss, water damage, lower deductibles, swimming pool liability, and more.
I paid $185 per month for a fairly comprehensive homeowners insurance policy on a two-story, 2100 square foot cedar home with about $100,000 worth of personal property inside. The home was 15 years old and we paid $140,000 to buy it. I also had a rider for jewelry that I will explain later, and a rider to rebuild at replacement cost if the home burned down and it costs more than $140,000 to rebuild it years later. This may sound like an expensive monthly expense, but the investment in this homeowners insurance paid off in the end.
I found in my experience, that if you can bundle your insurance policies with one agent, you may save money on homeowners insurance premiums and claims. I have my auto, life, homeowners, business and long term care insurance all with one agent. Building a long-term relationship with your agent can save you a lot of money in the long run.
For example, we had a slow, two-week toilet leak in our upstairs bathroom that caused major damage in our downstairs master bedroom when the ceiling finally came crashing down on our bed from the weight of the water over two weeks. When I called our homeowners insurance agent, that we did business with for twenty-five years, he said to pretend we never called him and told him that. Why? If the insurance company found out we had water damage, they would cancel our policy because we did not have a mold damage rider on our policy. He also explained that if our policy was cancelled, we would have a hard time finding new insurance at an affordable price because we would have to disclose that we had previous water damage. Whew! That relationship saved us thousands of dollars.
At the time, a mold damage insurance rider would have cost us $2000 per year extra and that was with a $5000 deductible! Instead of filing a claim, we fixed the leak, the ceiling, the carpet, dried out all the walls and got a new bed for a total cost of around $1,200.
Here are a few tips about buying homeowners insurance that saved us money:
Tip 1: How We Saved Money for Insurance on a Swimming Pool
We Saved Over $800 per year in premiums by having an umbrella liability policy.
We purchased an umbrella liability policy that was affordable and provided the extra liability and personal injury coverage we needed for owning a swimming pool. This type of homeowners insurance policy saved us around $800 per year over a conventional liability policy. In our state, we were required to have at least a 6-foot fence with locked gates surrounding our back yard. Any damage to the fence was also covered under the umbrella policy.
One thing we learned the hard way about swimming pool insurance claims is when a slow water leak in the pool pump pipes caused structural damage to our pool and cool deck. One year before we sold our home, a buried pipe that was connected to the pool pump, and on the other side of the pool, had a slow leak. We didn’t realize it until we started seeing the cool deck crack and the corner pool tile start to crack and chip off. We called a pool maintenance company to check if the pool was leaking and it was not. We realized then that it must be a pipe leaking and it was. After extensive digging, we found the leak and fixed it for $5.00. When we sold the house, the buyer’s inspector insisted the pool was leaking and wanted a $7000 allowance to have it re-plastered. I called our homeowners insurance agent and he said they could not cover it because we fixed the leak ourselves! Lesson learned.
Tip 2: How We Saved Money on Tree Damage to Our House
We saved $2,000 in roof repairs by cutting down dead trees.
Our home sat on 1 acre of land and was surrounded by tall pine trees and oak trees. We also had a separate car port and a separate double car garage that was made into a workshop. We were dilligent in keeping the dead trees cut down mainly because of fire hazard. One year after a violent thunderstorm, a tree landed on the garage and did some roof damage. The first thing our agent asked us is if the tree was live or dead. The major insurance company we used did not pay claims if damage was caused by dead trees!
Tip 3: How We Saved Money on Personal Property Theft
A $10 jeweley rider saved me over $2,000 when my jewelry was stolen.
I had some jewelry worth about $600 that was stolen from a hotel room while I was on a business trip. Again, because of my relationship with my agent, he paid my claim on that theft without having an appraisal, pictures, or a sales receipt. We then adjusted the homeowners insurance policy to include a jewelry rider for jewelry valued at greater than $500 and for replacement costs of the jewelry and not the cost of the jewelry at the time I bought it.
I also took pictures of all my jewelry, computer items, camera items, TVs, phones, appliances and any other personal property that I did not have appraised, and sent those to my agent. I wrote down serial numbers of those items and gave them to my agent in the event of theft. Remember, in a house fire or theft, some of those important papers that prove the value and possession of your insured items may go up or out the door with the property itself. If you do not prepare up front, you will have a hard time cashing in on the claim in the end.
It only cost me another $10 a year to add that jewelry rider, and without it and the pictures I took, I would not have been able to recover the money for the $1,500 of jewelry stolen from our home in a daytime break in almost three years later. Without giving my agent serial numbers and pictures of consumer products, I would not have been able to cash in on the $2,000 worth of hardware stolen in that break in.
Insurance companies and agents are not always helpful in designing homeowners insurance policies that give complete protection for individual needs. Often times, like we did, you have to learn the hard way about what exactly your policy will cover. Do not be afraid to ask your agent questions, and really think hard about what all could happen with your prized possessions so you can make the most of your homeowners insurance investment!