Your home is where your heart is, but it can also cost you unnecessarily if you are making bad moves when it comes to your homeowner’s insurance.
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While not having enough coverage is a costly mistake, particularly if your house burned to the ground, there are things you may be doing that make your premiums higher than your neighbor down the block.
With that in mind, here’s a look at five mistakes insurance experts say will cost you more each month.
Accepting the status quo:
We shop around when buying an appliance, purchasing a car or even spending for a new dress but when it comes to homeowner’s insurance people often stick with the coverage they have each year. “One of the things people don’t do is true comparison shopping,” says Keith Moore, Chief Executive of CoverHound, the insurance Website. “If you never shop the rate I guarantee you are paying more than you should.” According to Moore homeowners should shop their policy on an annual basis.
Making upgrades and forgetting about it:
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Upgrading your kitchen, installing high-end fixtures and otherwise improving your house will undoubtedly make you happy but it can cost you if you forget to upgrade your insurance along with it. “Often major upgrades like gourmet kitchens or glamour baths not only improve the aesthetics and livability of your home, but they increase the value,” says Richard Hutchinson, general manager of Progressive Home Advantage. “Consequently, the cost to replace these items also increases if you’re faced with a total loss.” What’s more, Progressive says features such as pools, hot tubs or trampolines could leave you more vulnerable to lawsuits, thus increasing the amount you pay each month to protect your home.
Having a low credit score:
You may not think a low credit score matters when it comes to homeowner’s insurance, but it does and in some cases it matters a lot. According to Moore, in every state except California your credit score can drive up the price of your homeowner’s insurance. “There’s a direct correlation between someone with a low credit score and the frequency of claims,” says Moore. “Someone with a credit score of 500 not only lets bills slip but also the general maintenance of the home, which leads to claims.”
Setting too low of a deductible:
Nobody wants to be hit with a high deductible when something goes wrong, but setting the amount you have to meet before the insurance kicks in at too low of an amount could end up costing you more. According to Laura Adams, senior analyst for insuranceQuotes.com, if you set your deductible too low it almost encourages you to make more claims than if you had a high deductible to meet. “One claim on your policy can cause your rate to rise on average 9%,” says Adams. “In some states we’ve seen a 32% rate in increase just from making one homeowner’s claim.” If you set the deductible high it forces you to avoid making any frivolous claims and seeing your premiums go up long after the repair is made.
Letting discounts expire:
One of the good things about homeowner’s insurance is that the carriers give you a lot of discounts. For instance you can get a discount for having your auto insurance with the same carrier, for not smoking or for being a retiree. Even living in a gated community will get you a break on your insurance. While most people are trained to ask about all the discounts upfront, they fail to follow through once their discount expires to get a new ones. According to Moore some discounts can last as long as five years, like the new homeowner discount, while others are only in effect for two years. Staying on top of when the discounts expire and getting new ones can go a long way in saving you money each month. “You should ask when they expire and rates go up and shop around again,” he says.