The start of hurricane season each June coincides with the arrival of my annual homeowner's insurance bill, and the price is always a shocker.
Like many people in Charleston County, the cost of insuring my house is far more than the annual property taxes, and the price exceeds several months of mortgage payments. And I'm not in a flood zone or high-cost "wind pool" area for hurricane insurance. So, I'm always looking for ways to reduce my premiums without greatly increasing financial risk. Consider these ideas:
South Carolina's insurance reform legislation in 2007 laid out a handful of ways that property owners could make their homes or rental properties more resistant to hurricane damage and receive insurance discounts. To get these discounts, homeowners need to notify their insurers, and in some cases provide certification from contractors.
Note that if you qualify for a discount but did not realize it, those premium discounts are retroactive back to January 2008.
The most likely discount for home- owners to overlook is roof tie-downs, generally metal clips or straps attaching the roof structure to walls of the home. Qualifying roof tie-downs can result in an annual premium discount in the low single-digits, but that could add up to real money if you're owed a retroactive discount.
The catch is, if you think you have qualifying tie-downs, you'll likely need a certification statement from whoever installed them (or built the house), or certification from an inspector. Check with your insurance company if this applies to you.
Larger discounts are available to those who have protected all of their home's exterior doors and windows with impact-resistant windows and doors or shutter systems. Having plywood panels doesn't count. Those who have taken such expensive measures to protect their homes likely sought out insurance discounts, but if not, protecting building openings could result in a substantial percent premium discount each year since the work was completed.
If your home was built in 2008 or later, make sure you are getting credit from your insurance company for having a home that meets modern building codes. Also, if your home has a hip roof - a pyramid-like roof that slopes on four sides - be sure your insurer is factoring that into your rate, because hip roofs are more hurricane-resistant than gable roofs.
Of course, you can always lower your insurance premiums by increasing your deductible, but that also increases your financial risk. Remember that with wind/hail deductibles, a 5 percent deductible means that your deductible is 5 percent of the insured value of the home, not 5 percent of a potential claim.
So, if you have a home worth $200,000 and raise your wind/hail deductible from 5 percent to 10 percent in order to get lower premiums, you would be taking on an additional $10,000 in financial risk in return.
It's always a good idea to shop around and see if you can get a better deal. And it could make sense to see if having auto and home insurance with the same company will save you money. Insurers typically give discounts to people with multiple policies. However, remember that in S.C., once the cost of insuring your home exceeds 5 percent of your income (federal adjusted gross income), the state will give you a tax credit covering up to $1,250 in annual premiums that exceed the 5 percent threshold.
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