 All across Texas – and the rest of the country – the increasing cost of homeowners insurance is becoming more of a barrier to homeownership for many people. While gathering together a downpayment is still probably the most formidable task when it comes to buying a home, it’s the ancillary costs like insurance, taxes, and utilities that take a big bite out of our monthly income.
According to the Insurance Information Institute, the average cost of homeowners insurance increased by 8% last year and is expected to rise another 9% this year. But many homeowners have seen increases ranging from 30% to 70%.
In Texas, for example, mold claims in 2001 cost insurers more than $850 million. And water claims accounted for 32% of all claims in 2001, up from 24% in 1997.
Today’s wise buyers would do well to scout for homeowners insurance as they’re also getting pre-approved for a loan and hiring an inspector.
Applying for – and getting – insurance
When you apply for homeowners insurance, most companies use criteria including your credit score and something called the Comprehensive Loss Underwriting Exchange (CLUE) database, which holds claim histories of individuals and properties for five years. Insurance companies share this database when they determine whether to insure your property – and that’s not always a good thing for consumers.
Even if you've owned a home and have had no problems obtaining insurance, if you want to buy a house that comes up with a number of claims against it (which will come up in the database), you may not be able to get insurance for it.
You can get the home’s CLUE report, which covers any losses claimed on the property, including dog bites, flood, earthquake, theft, vandalism, wind, and medical payments – but only if you own the home. However, you can ask the homeowner to give you a copy, so you’re at least going into the sale with your eyes wide open.
Having trouble finding insurance?
The Texas Department of Insurance (TDI) is a great resource for consumers shopping for insurance – especially if you’re having trouble finding a plan that’s affordable. For example, TDI’s Market Assistance Program (MAP) may be able to help you find homeowners insurance and lower-priced auto liability insurance. The following free programs also may be able to help:
Helpinsure.com
Helpinsure.com is a free and secure service to help Texans shop online for homeowners insurance. When you sign up to participate in Helpinsure.com, agents and companies writing homeowners insurance in Texas will be able to view your information and may contact you to discuss your insurance needs. In addition, you can find lists of agents and companies writing new homeowners insurance in your area. The Helpinsure.com Web site also has a learning center with useful information for homeowners shopping for coverage. For more information or to sign up, visit Helpinsure.com or call toll-free 866/695-6873.
|
Texas FAIR Plan Association
The Texas FAIR Plan Association provides residential property insurance to qualified consumers. To be eligible for coverage, you must have been denied insurance by at least two licensed insurance companies actually writing residential property insurance in Texas and may not have received a valid offer of comparable insurance from a company licensed in Texas. Coverage is the standard Texas HO-A policy form. For more information, visit the Texas FAIR Plan Association Web site at www.texasfairplan.org.
Shop smart and save money
Use these tips from the Texas Department of Insurance to save money in your search for homeowners insurance:
Do your research
Before you buy a policy, get price quotes from several companies and compare the rates and coverage. TDI publishes homeowner’s rate guides that can help you do your research. The rate guides list annual premiums for sample policies; complaint indexes that indicate a company’s customer service record; and A.M. Best Co. ratings, which indicate a company’s financial strength and stability.
Include independent agents in your search. Some agents only represent a single company or company group. Independent agents, however, typically represent several companies and can give you multiple quotes at one time.
Determine what coverage you want and need. For instance, if you have valuable car stereo equipment or if you need more than basic residential coverage for jewelry, collections, or other valuables, you may need endorsements that change or add coverage. Endorsements that add coverage will raise your premium.
When you call companies for quotes, answer questions truthfully. Wrong information may result in an incorrect price quote, rejection of your insurance application, or cancellation of your policy.
Consider higher deductibles
The deductible is the amount you have to pay out of pocket on your claim before the insurance company pays. The higher your deductible, the lower your premium. To save the most, choose the highest deductibles you can afford.
Ask about discounts
Insurance companies may offer policy discounts that will lower your premium. Ask your agent what discounts the company offers and which ones you are eligible for.
Make sure you have uninterrupted coverage
Never cancel an existing policy until you get your new policy or a written “binder.” A binder proves you have coverage until the company issues your policy. Last, don’t pay cash to an individual agent. Pay with a personal check or money order made out to the insurance company or agency. Get a receipt for your premium payment.
|
