|
Options for cutting your homeowners premiumsMany Texas consumers are experiencing "sticker shock" when they receive their homeowners policy renewals. Some insurers, writing policies through affiliates exempt from rate regulation, have imposed very large premium increases. These increases have prompted the Texas Department of Insurance (TDI) to examine some of these insurance companies to determine whether they are violating state laws against unfair discrimination. In addition, state policymakers are rethinking the old laws that allow "Lloyds" companies and "reciprocal exchanges" - which account for about 95 percent of the Texas market - to sell homeowners insurance at unregulated rates. This undoubtedly will be a big issue in the 2003 Texas legislative session. Meanwhile, consumers can take a number of steps to reduce their homeowners insurance costs. Compare coverages and prices. Homeowners rates vary widely among companies. While some companies still sell the comprehensive HO-B homeowners policy, many now offer only the more limited HO-A. Call several local insurance agents, including independent agents who represent several companies. They probably will ask you a number of questions to help determine insurability and the amount of coverage you will need. When comparing coverages and rates, make sure you understand what type of policy is being offered and what losses are covered. Remember that, under Texas law, an insurance company can cancel a new homeowners policy in the first 90 days for just about any reason. Buy the right amount of coverage. Homeowners policies cover a home´s replacement cost, not its market value, which to a large extent is determined by its location. If you insure for more than the replacement cost, you will be paying for coverage you don´t need. Ask your insurer, agent, a contractor or a real estate appraiser to help calculate the replacement cost of your house. Increase your deductible. Raising your deductible should lower your premium. With some companies, increasing the deductible on a $100,000 policy from $250 to 1 percent of the coverage limit could cut your premium by more than 20 percent. Larger deductibles, up to 5 percent, are available. Only you can decide whether a particular deductible is reasonable in terms of your ability to pay it if you have a claim. Qualify for discounts. Texas has an array of available discounts. Some are mandatory for insurance companies while others are optional. The following discounts are mandatory, although Lloyds and reciprocal exchanges may offer different percentages because of their exemption from rate regulation:
Companies may give voluntary discounts for such things as permanently marking personal property as a theft deterrent, installing a "dry hydrant" to provide water for fighting fires at a rural residence, buying a "companion" auto policy with the same company and having a good claim record. Ask about such discounts when you´re shopping. For more information about cutting homeowners insurance costs, see the Texas Department of Insurance consumer publications, Shopping Smart and Homeowners Insurance: A Guide for Texas Consumers. They are available online at TDI's Web site www.tdi.state.tx.us, or you can get printed copies by calling 1-800-599-7467. For more information contact:
|
