Homeowners Insurance

Smart homebuyers are doing their homework by getting loan pre-approval, scouting out neighborhoods, and getting a realistic idea of how much house they can afford. But now there’s another item to put on the to-do list – make sure you can get homeowners insurance.

The Insurance Information Institute says the average cost of homeowners insurance increased by 8 percent last year and is expected to rise another 9 percent this year. But many homeowners have seen increases ranging from 30 to 70 percent.

The insurance industry says the increases stem from a variety of factors, including catastrophes like recent hurricanes and earthquakes. Over the past 12 years insurers paid out more than $100 billion in catastrophe-related losses-about $700 million per month-many times more than in previous decades.

Another contributor is mold. Multi-million dollar jury awards, sensationalized reporting in the media and profiteering by some individuals have led to an explosion in mold claims and costs.

Potential homebuyers are advised to make homeowners insurance a priority when house hunting. In light of today’s insurance crisis, homebuyers should not take their insurability for granted.

Just because you and your spouse have an unblemished insurance record, that doesn’t mean the house you’re eyeing does. When an insurance company considers whether to offer you insurance, they’re not just looking at your history, but the history of the property in question.

One way to examine the house’s claims history is through its CLUE report. About 600 insurers, making up about 90 percent of the market, feed into the CLUE database. The report will show you every claim filed over the past five years.

The database covers 27 types of losses, including dog bites, flood, earthquake, theft, vandalism, wind, and medical payments. You can order an electronic report from Choicepoint, the company that owns the CLUE database, for $12.95 by visiting Choicetrust (www.choicetrust.com).

One caveat: you can’t order a copy of a report unless you own the home. Prospective buyers can’t request a report directly from Choicepoint.

Here are some additional tips for saving on homeowners insurance:

Make sure you take advantage of every discount you are eligible for. Insurance companies offer many discounts, including discounts for loyal customers and to those who insure their home and vehicles with the same company.

You can save money if your residence is equipped with smoke detectors and by installing certain home security devices.

Raise your deductible. Higher deductibles could produce savings of 15 to 30 percent or more.

Maintaining good credit will also help you save on home insurance.
Also, because insurance companies use your credit history in determining whether to insure you and what rate, you should get a copy of your credit report to make sure it’s accurate.