Homeowners insurance is essential in protecting one of your most significant assets, but paying the premium when times are tough can strain your budget. If you’re facing a homeowner's premium bill you can’t afford, here’s some advice.
If I Can’t Afford My Homeowners Insurance, What Should I Do?
Don’t Cancel Your Homeowners Insurance
The answer is almost certainly not canceling your New Hampshire homeowners policy. Canceling will end up costing you more in a couple of ways.
Most obviously, canceling your coverage leaves you unprotected if something happens to your home. A large, or even small, claim could cost many times more than your premium.
Additionally, if you have a mortgage, your lender will be notified that you no longer insure the property. As the lender requires their interests be protected, they will put forced-place insurance coverage on your home, to cover the loan balance. You’re also the one who’ll ultimately pay those premiums, as your lender will likely add them to your monthly mortgage payment.
Though you may think the cost of forced-place insurance would be less expensive than traditional insurance given less coverage on the dwelling, no contents coverage, and no liability, it is likely not. In fact, it is often four times more expensive as the banks can charge a premium for it.
Thus, canceling will lead to paying more if you have a mortgage. It also could leave you without protection against significant damage. This is seldom what you should do.
What if I Cancel my NH Home Insurance for a Few Months?
Insurance companies have many rating factors, including consistency of coverage. If you cancel your home insurance without replacing it, you will likely pay more when purchasing it again. You may also have difficulty finding an insurer willing to write the coverage, given underwriting has become more intense in the last year.
A coverage gap may also open Pandora's box because if your current carrier does not take you back, a new carrier will likely inspect the property. You may add to your bills if anything needs repair, wiping out the few months of savings by not paying the premium.
Work With an Independent Insurance Agent
If you already work with an independent agent, contact them and explain you need to reduce your premium. Be honest with them. Let them know you’re struggling to afford insurance so they can best help you.
They can make suggestions such as increasing your deductible, bundling your auto insurance, or removing coverage enhancement endorsements.
If you don't work with an independent agent but have a direct carrier such as State Farm, AAA, or Liberty Mutual, contact an independent agency, such as HPM Insurance, as they have access to many carriers, not just one. You may find that you can cut your costs significantly while not jeopardizing your coverage.
Compare Homeowner's Policy Options
The most important thing an independent agent can help you with is shopping around. They can request customized quotes from several different insurance companies so you can see who offers a policy with the best rates. It’s important to check multiple insurers because they’ll each evaluate your situation differently.
Other Strategies for Reducing Premiums
Depending on the specifics of your situation and needs, a knowledgeable insurance agent might suggest exploring a few strategies for reducing premiums:
- Deductibles: Raising deductibles might decrease rates while transferring a defined amount of risk onto you. Your potential additional cost if there’s a claim is normally only the amount you increase the deductible.
- Limits: Lowering limits might decrease rates, but this may have a muted effect and present more risk. Lower limits could expose you if a lawsuit exceeds the maximum amount your policy will pay.
- If you believe the dwelling is over-insured, have your agent run an updated replacement cost estimator. You may find your home overinsured, but be aware that with inflation impacting the costs of building supplies and materials, you may discover your home was underinsured. This could have unintended consequences.
- Non-Essential Coverages: Sometimes, non-essential coverages can be removed. Agents don't like removing coverage as they want to see you covered in a loss, but it is ultimately your decision.
- Discounts: Insurance companies offer many discounts, including some you may be unaware of or new since you first wrote the policy. An agent can help you explore all available discounts.
These decisions can be helpful, but shouldn’t be made without the informed advice of a knowledgeable insurance agent who’s well-versed in homeowners insurance.
Speak With a New Hampshire Agent
We at HPM Insurance understand that many homeowners in New Hampshire are managing tight finances, and that can require making insurance adjustments. For help making adjustments to your homeowner's insurance, speak with one of our independent agents.