What do you like best about your home? Is it the bright, sunny kitchen, the shiny wood floors, or the cosy bedrooms?
Or is it because your home is probably the biggest part - if not the biggest part - of your net worth?
In either case, you need to have homeowner's insurance to protect what you have.
J. Robert Hunter, who is in charge of insurance for the Consumer Federation of America, says that the market for homeowners insurance has opened up again. A few years ago, there were reports that prices were going up and there weren't as many policies to choose from. He said that premiums should go up by no more than the rate of inflation this year.
Marshall McKnight, a spokesman for the state Department of Banking and Insurance, said, "The market for homeowners' insurance is still competitive, so people can choose."
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"You can switch companies and pay twice as much," Hunter said.
Hunter also said that you shouldn't just call an agent and expect him to do the shopping for you. Agents don't work for all companies, so they might not find you the best deal.
"Replacement cost" is a better way to insure than "actual cash value." After all, if your things are destroyed, do you want the insurance company to send you enough money to buy a new couch, or do you want a $50 check for the value of your 11-year-old couch?
Make sure you have enough insurance to cover at least 80% of the cost of building a new home. If you aren't, it could hurt you even if you don't have to replace your whole house.
Let's say it would cost $200,000 to replace your home, but you're only insured for $100,000, which is half of what it would cost to replace. If you lose $10,000, you would only get $5,000 as compensation.
Of course, it's not always easy to know how much it would cost to build a new home. For example, I know how much I paid for my house and how much I could probably sell it for, but I have no idea how much it would cost to rebuild if it burned down.
The state Department of Banking and Insurance and the Insurance Council of New Jersey both say that homeowners in this situation should talk to their insurance company. Based on the size and location of the home, the insurance company will be able to give an estimate of how much it will cost to rebuild.
Think twice before making a small claim to your insurance company for small damage to your home. There have been reports of people whose insurance rates went up a lot after making only two claims. So if it's a loss you can handle yourself, do it.
In the same way, think about a higher deductible.
Hunter said, "If you're not going to file a small claim, it doesn't make sense to pay a premium to be covered for a small amount you're not going to file for."
Hunter said, "For every dollar you give to an insurance company, you get back, on average, only 60 cents." The rest goes to making money for the insurance company and paying for its costs. So, if you can cover smaller losses on your own, you should.
Hunter raised the deductibles on both his car and home insurance policies about 20 years ago and put the money he saved on premiums in a special account. Over the years, he used that account to pay for about $2,000 to $3,000 in losses, most of which were related to cars. He still has $4,000, which could have gone to the insurance company.
"Most insurance companies now say that your deductible should be at least $500. If you can afford it, raising your deductible to $1,000 could save you up to 25% "A business group, the Insurance Information Institute, says that.
Make sure you have enough liability insurance on your home insurance policy in case someone gets hurt on your property.
Think about getting your home and car insurance from the same company. If you buy two or more policies from the same company, some will take 5 to 15% off your premium.
If you put in smoke detectors, deadbolt locks, or burglar alarms, you can get a discount.
Keep a clean credit history. When setting their rates, insurance companies are checking credit reports more and more.
