Strategies to reduce home-insurance costs

by Center for Personal Finance editors

NEW YORK (5/12/08)--During tough times, families place a high priority on reducing expenses to save money. One expense that's typically overlooked is home insurance, but there are plenty of ways you can lower the premium--often with minimal effort (MarketWatch.com May 4).

First, find out if you're eligible for credits:

• Guard against natural disasters. If you've taken steps to minimize loss from natural disasters--use storm shutters, install shatter-proof glass, purchase a back-up generator, or invest in a wind-resistant roof--you may qualify for a sizeable discount, particularly in disaster-prone locations.

• Focus on security. If you live in a gated community, install a home security system or burglar alarm, use a sophisticated sprinkler system, or have built-in alarms that notify police or fire departments, chances are good that you'll be rewarded with substantial discounts.

• Automate detection systems. Some homes have central monitoring stations that automatically shut off the water while you're away if a leak is detected or automatically raise the temperature if your pipes are in danger of freezing. Make sure the insurance company knows of these systems and ask about discounts.

Ask about additional discounts. You may save money by raising your deductible, staying with the same company for several years, insuring both your home and automobiles with the same company, and taking advantage of senior discounts (MSNMoney.com Feb. 15). And the Insurance Information Institute, New York, stresses the importance of maintaining a good credit record. Pay all bills on time, keep credit balances as low as possible, and correct credit report errors as quickly as possible. Having a clean credit record has a positive influence on the price you pay for many consumer goods--including insurance.

Finally, shop around on the Web (The Wall Street Journal.com May 7). Compare rates at InsWeb.com and Insurance.com. Before you shop, review your policy and see if it needs to reflect any upgrades or new purchases. Make sure that whatever premium you pay, you're properly protected with sufficient insurance coverage.

For more information, read "FAQ: Homeowners Insurance" in Plan It: Retire Ready Toolkit.

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