With dozens of insurance carriers offering homeowners and renters insurance in Houston Texas and surrounding areas, shopping around for a policy can be a daunting task. Policy premiums can vary substantially from one carrier to the next and policy options and coverage limits can be overwhelming and require an attuned eye to catch differences between plans. It is always advisable to use an insurance broker or independent agent when shopping for coverage versus going with an agent who only represents one company. An insurance Broker will likely have access to a variety of insurance carriers, each with a different set of underwriting requirements and risk
Here in Harris County, homeowners’ insurance companies are faced with several potential hazards which make pricing policies a bit of a challenge. Not only are properties exposed to the usual hazards like fire, theft, vandalism, and windstorm, but Hurricanes and hail storms are a frequent occurrence, causing severe flooding in the process. The results of this increased exposure to risk can be a formidable challenge in terms of acquiring insurance at a reasonable price while not skimping on the coverage. While the trend for homeowners’ insurance rates has been upward over the last several years, there are several deals to be had in the market at present. And, there are several variables within
the policy that can be adjusted in order to bring the premiums down considerably:
Raise the deductible for wind hail
Most homeowners’ insurance policies in Texas will offer one deductible for all perils and a separate standalone deductible for wind and hail. This standalone deductible typically will be based on a percentage of the homes’ replacement cost. One effective way to reduce the premiums would be to up this wind/hail deductible up from 1% to 2% as an example. But be mindful increasing your deductible means you will be responsible for substantially more out of pocket exposure should your property be damaged by a Hurricane or Hail storm.
Look to Purchase Your Home and Auto Insurance from the Same Carrier
Many insurance carriers will offer sizeable discounts for having multiple policies under one insurance company. Discounts for having home and auto bundled can range from 15% to as high as 40%. This does sound like a lot, but have your insurance agent or broker be sure to cross reference this with a variety of insurance carriers to ensure this is the best option. In many cases, the net savings can be more by purchasing multiple carriers for home and auto.
Adjust the Replacement Cost of Your Dwelling
Insurers typically will want to insure your property for 100% of the true replacement cost of the residence in the event of a total loss. However, in many cases, you can have the replacement cost adjusted to the downside, and this can be a very effective way to reduce the annual premiums you pay for the policy. But, be very careful not to reduce your coverage amount for dwelling below 80% of the true replacement cost. If this occurs and you have a loss, you could wind up paying a whole lot more than what you bargained for. This is because insurers will place an exclusion ratio on the amount they would reimburse you that equates to the difference of the insurance you purchased
versus the amount of insurance you should have purchased based on this 80% replacement cost coverage rule. Generally speaking, it is always advisable to purchase 100% of your replacement cost in the event of a total loss. However, slight reductions in dwelling coverage will have a fairly significant effect in lowering premiums.
Consider Scheduling Expensive Jewelry or Other Possessions Separately
Many people never realize the devastating impact to a homeowners’ policy a theft loss can have. If this occurs and you file a claim for theft of expensive personal items, you could wind up paying a lot more in premiums at renewal and potentially being uninsurable with other carriers for as much as 3 to 5 years after the theft loss. So, if there are personal items with high values such as wedding rings or watches, you may consider purchasing a separate Personal Articles policy. In the event of a theft loss, the PAP would not be linked to your homeowners insurance policy and therefore would not be effected by the loss.
Review Coverage Annually to ensure Best Pricing
Have your agent or Broker cross reference different insurance carriers at the renewal of your homeowners insurance policy periodically to ensure you are not paying more than is necessary as insurance is cyclical. Most carriers will take an incremental increase over time on premiums, so you should be sure to look around at least every other year to ensure no better pricing is available elsewhere. Also, it is a good idea to have a discussion about the appropriate amount of insurance you have with your agent or broker. Being under insured at the time of a claim is definitely not the right time to discover you have inadequate insurance in place. If you completed any renovation projects during the year or possibly built an add on structure to your home it is important your agent review this with you to determine you have the correct amount of insurance.