There's a simple way to save money as a homeowner every month. Most people don't even know or think about it. It's your property insurance.
At the risk of sounding like an animated gecko, you can save $500 or more a year by looking into your property insurance. I saved more than $1500 -- no lie -- And it didn't involve changing providers.
To understand how to save money, you need to think like an insurance person.
Property insurance people evaluate many things. However, the three main things are your location, your home itself, and what's inside it. They use this information to calculate your premium paid in monthly installments via your mortgage company or annually if you're a cash buyer.
The purpose of evaluating these three areas is to understand how likely an accident or disaster is to happen and - if it does - what it would cost to fix it.
To evaluate your home, its risk, and the cost to bail you out of a bad situation, they're looking to understand one critical thing; what it would cost to rebuild.
Why is this important?
The cost to rebuild is essential because, in the unlikely and unfortunate experience of a catastrophic event, the insurance company is on the hook to provide you with the home you lost, in the place you lost it.
Catastrophic could mean smoke clean-up after a kitchen fire or damage to a roof from a hail storm. But it also could mean rebuilding after a more significant incident.
Rebuilding in their calculations means putting things back the way they were. Thus, to assess what it would cost to rebuild, they're either making assumptions or getting that data from you.
And, there's the kicker. When was the last time your insurance company asked you specifics about your home? E.g., what type of floors do you have? How about what kind of countertops, number of fireplaces, etc.?
If you haven't had this conversation in-depth with your insurance company, you're likely paying for things you don't have or don't value.
What can you do?
Call your insurance provider and ask to review your policy on the phone. See what sorts of things are covered. Trust me; they have a list.
Almost every insurer has a list of things they use to evaluate the cost of insuring your home. That list then has ratings or values assigned to each item. These ratings range from premium on down. Think of it as a report card.
If those values are wrong, the final math will be bad. So you may be overpaying for lousy math. Give your insurance company a call.
On the call, your goal is to go through the list and help them to adjust values item by item where appropriate.
Do you have premium flooring? Likely not.
For example, we all love your shiny wood floors. But hardwood floors are not considered premium by most insurance companies. Marble floors and some high-end are considered premium. Do you have marble floors? Good for you! Move on to the next item on the list. If you do not, ask what premium means and have it adjusted.
Historic homeowners are often overcharged.
A home's historical and original fixtures and finishes are often assigned higher values - and thus a higher cost to insure - than their more contemporary cousins. Has your insurer asked you which items on your home are historic and original to the home? Probably not.
For example, I discovered my home was insured to cover original historic light fixtures.
This is silly, as my home was built before electricity was available in most homes, including my home. So I was literally paying a premium for original light fixtures when the original owner's light source would have been candles!
Why? The insurance people who review your home have likely never stepped foot inside your home.
Instead, they likely pulled up your listing for your home, looked at the pictures, and made educated guesses. When in doubt, they will overestimate those values, not underestimate them.
Why? Their job is to make sure the company doesn't lose money, not you. Thus, they're going to be in hot water if they guess wrong and low, but not if they guess high. This is precisely how my policy person decided I had original fixtures.
Safety First!
Home safety is another huge contributor to insurance premiums You may have considered this when it comes to gated parking or a monitored alarm system, but safety is a broader and more complex concept.
For example, we have four fireplaces in my home, each with a front in two rooms (front and back). Only one chimney still extends beyond the roofline. All are fully sealed. None of them "work."
Most homes, like mine, in historic New Orleans, had fireplaces designed for burning coal or housing a cast iron stove system. Thus, very few of them are still operational.
They'd need to be fully retrofitted to be used. They'd also need chimneys installed above the attic and through the roof.
But, the insurance person didn't know or ask about that. They saw my listing and counted. And counting can be a double edge sword. Why? In this instance, they counted eight fireplaces. So, I was unwittingly insured for eight active fireplaces.
It gets worse. Because fireplaces are not only a safety concern but also a historical feature (see above), I was also insured to rebuild eight historic fireplaces and chimneys.
The lesson here? When discussing the list of items and how premium or historic they may be, be sure to inquire about safety features that add to or subtract from your own premium.
For example, fireplaces add. Smoke and carbon monoxide detectors subtract. And, if you're in the city of New Orleans, the NOFD will come and install detectors for free!
Lastly, upgrades to your home may result in the insurer deeming your home to be safer and thus less costly to insure. If you've updated wiring, upgraded your roof to architectural vs tab shingles, installed a monitored alarm system, etc. call your insurance provider. You may find these investments in your home get you some cash back over time on your property insurance.
Conclusion/TL;DR
If you're looking to save $500 a year or more, call your property insurer and hold them to task. Ask about the components they consider when insuring your place.
Assess and adjust whether these components are rated (e.g., premium) correctly or not.
Check for being overinsured for historical elements that are non-existent or non-original to the home.
See what safety features could contribute to or save you money on your premiums.
When you do, you may find savings that can save you the cost of a round trip ticket each year OR more than $15,000 over the life of your mortgage.
And, be sure to check in annually. You'd be surprised - or not - at how things can change every year.
You may not notice your insurance premiums have gone up until your mortgage payment or escrow amount escalates. If it does, it's almost always the insurance provider. Give them a call.
Voted Neighborhood Favorite by Nextdoor, Team Cool Murphy is a top-producing, licensed real estate team based in New Orleans, brokered by Cool Murphy, LLC.
Celebrated for her next-level creative approach to real estate, Elisa Cool Murphy is an award-winning, top-performing agent in New Orleans and the founder and leader of Cool Murphy, LLC.
Contact Her -
email: cool@coolmurphy.com
Facebook: @homeinneworleans
IG: @coolmurphynola
YouTube: @coolmurphynola
phone: 504-321-3194
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