A homeowner's guide to natural disasters.

Ways You May Be Able To Affect Your Premium

Adjust The Deductible

A deductible is the amount of loss paid by the policyholder before any loss is paid by the insurer. The larger the deductible, the lower the premium.

A policy may have different deductibles based on the peril of the loss. Many insurers are selling homeowners insurance policies with percentage deductibles for storm damage instead of the traditional dollar value deductibles that are used for other types of claims such as fire damage and theft. One of the more common percentage deductibles is the hurricane percentage deductible, which applies to damage solely from hurricanes. Therefore a policyholder may have a $1,000 deductible for fire losses, but a 2% deductible for hurricane losses. Hurricane percentage deductibles can be very significant. An earthquake policy could add a third deductible that could very well differ from all deductibles in the homeowners policy for the same property.

Dollar Deductibles – The dollar value the insured must pay before the insurance company will pay the remainder of the claim. With a policy that has a $500 standard deductible, for example, the policyholder must pay the first $500 out of pocket. Some insurers are selling policies with higher dollar deductibles for hurricane and earthquake damage. The higher the deductible for a given policy, the lower the premium, since the insured is bearing more of the risk.

Percentage Deductibles – Percentage deductibles are based on the home’s insured value. So if a house is insured for $100,000 and has a 2% deductible, the first $2,000 (or 2% of the insurance value of $100,000) of a claim must be paid out of the policyholder’s pocket. In many states, policyholders have the option of paying a higher premium if they would rather have a traditional dollar deductible instead of a percentage one, or if they prefer to have a lower percentage deductible. Percentage deductibles are sometimes mandatory. Note that with a percentage deductible, the dollar value changes as the insured value changes.


Qualify For Discounts

Discounts vary widely by state and insurer. It is recommended that homeowners check the prices of multiple insurance companies before choosing a company to provide insurance coverage. The following list of potential discounts is not intended to be complete:

1. Discounts may be offered for purchasing home and auto insurance from the same insurer.

2. Discounts may be available for homes with smoke detectors, burglar alarms,
or dead-bolt locks.

3. Homes with sprinkler systems may also be eligible for discounts.

4. Discounts may be available for policyholders that are at least 55 years old and retired.

5. Some professional, alumni, and business groups qualify for discounts from some insurers.

6. Sometimes insurers give discounts for long-term policyholders.

7. The extent to which the homeowner has protected the structure from windstorm may make the home eligible for discounts for shutters, superior roof construction and connection, or other such mitigation techniques.


Take Care Of Your Home

1. Prior Loss – A “prior loss” is one that has occurred to the home prior to applying for insurance. The current owner of the home may or may not have been the owner of the home at the time of the loss. The treatment of prior losses varies widely by insurer. The treatment also varies widely by state. In certain areas, insurers may surcharge policies that have had a prior loss within a certain period of time.

2. Repair of Existing Conditions – Many insurers consider the existing condition of the home when determining the premium for the policy and also the availability of certain coverages or policies. Some insurers may provide a price break to policies where there has been a recent roof renovation. Different roof types may also be eligible for a discount. Complete renovations of plumbing or electrical systems may be eligible for lower premiums.

3. Post Event – It is the responsibility of the insured, and in the insured’s interest, to reduce further loss once an incident has occurred. For example, if a window is broken during a hurricane, the insured should cover the window to prevent rain from getting in the house. The costs for these actions are usually covered by the insurer.