My wife and I are thinking of selling our house and buying something a bit bigger. The house we are in is a little small for our expanding family. It could be done, but not very comfortably. In that process, we started our research by visiting with a loan officer to run some numbers and make sure that we were shopping in a price range that we could afford.
One of the subjects that came up in the process is the subject of home owners insurance. As we discussed it, I mentioned what we were currently paying. And then the discussion really started. Turns out, our loan officer thinks that we are over paying by quite a bit. By about 40% if the loan officer is even close to correct. Ouch.
When we bought our house, the insurance was the last thing on my mind. When the day came to sign all the paperwork, the loan officer that we were using at the time (not the same one we saw the other day) asked for the proof of insurance. Which I did not have, because I had not gotten the insurance yet. I didn’t see the purpose in insuring a house that I didn’t technically own yet. I was wrong. I couldn’t take ownership without proof of insurance. Two very quick trips to the insurance agent that has our car insurance account later, I had my home owners insurance, and was able to sign the paperwork and take ownership.
In my haste, I took what I could get and what the agent suggested. Because our house loan has an escrow account, I never really see the bill for the insurance. It never really got brought up, and it just continued on it’s merry way. I fell prey to a common personal financial mistake. I didn’t shop around. And I didn’t revisit my policies to check for pricing and coverage.
Committing that mistake may only be costing me a few hundred dollars a year. I say only, because it could certainly be much worse. Now, as we begin shopping for a new house, we’ll also be shopping for insurance. Depending on what we find, we may be changing agents. We may even change agents for the auto coverage as well since we’ll be shopping that around as well. It doesn’t hurt to look, right?
I know I’m not the only one to ever fall victim to this error. If you’d like to share your story, you can in the comments below.
You should also consider increasing your deductible to $1000. This simple act usually saves 10%. You must of course keep that amount of money aside in case of loss but consider your own past claims history. I have had property insurance for twenty years and no losses.
Be careful however when shopping around to ensure you know exactly what type of policy you have versus the one the new company is offering. Are you comparing apples to apples? Are they offering a cheaper form but in the end there is way less coverage? Are the specific limits for things automatically covered higher with current versus new company like jewellery, bikes etc? What kind of claim reputation do they have?
Also be very aware that most banks sell their own insurance and very likely they are making a pitch to you. Try a broker, not a direct writer who sells only their own product. A broker is someone who knows the type of coverage you have and shops that exact coverage to several different insurers.
Generally it is always cheaper to place auto and property insurance with the same insurer as multipolicy discounts are given. Find out all discounts available now and in future before signing on the dotted line.