QuickTips: Smart Homeowners Insurance Strategies

Make a home inventory. To determine how much coverage you need, and to ensure you'll be adequately compensated in the event of a loss, it's essential to make a detailed written home inventory and take photos or a videotape of your possessions. Include the exterior of your home and your yard, and the storage in your basement, attic, and garage. For your most valuable property, record model and serial numbers, and keep purchase receipts.

Ask your insurance company for home inventory instructions, or use one of the many software programs available. Be sure to keep your completed documents in a safe place outside your home, and update them annually or whenever you make major purchases.

Look for ways to save on premiums. One way to reduce homeowner premiums is to opt for a higher deductible. Since the purpose of insurance is to protect you against large losses, not minor mishaps that you can cover out of pocket, it’s better to have broader coverage with a higher deductible, than narrower coverage with a lower deductible. So for example, if your deductible is the typical $250, increase it to $500 or $1000. Then apply the premium savings toward upgrading your policy, where necessary, to reduce the possibility of an uninsured catastrophe. For instance, buy a guaranteed replacement cost endorsement or umbrella liability policy.

Also periodically check with your insurer to see what discounts you’re eligible for, since the specifics vary from company to company. In addition to the standard discounts for multiple or long-time policyholders, insurers are increasingly offering premium reductions to policyholders who take preventive measures to avoid claims. Ask about discounts for home security systems, fire protection systems, and nonsmoking households.

Get the facts. Contact your state insurance department for unbiased information and assistance regarding your rights and responsibilities under your state’s insurance laws and regulations. Some states also publish insurance premium comparison shopping reports.