Slashing Homeowners Insurance Costs: Part I
The Country Home Insurance Trap
I live in the country. This means a rural homestead that can be far from city services. I live in a wooded area, with no fire hydrant. There is limited access to a fire station close by, and on an unpaved road. Fortunately, my house is not close enough to any trees for them to cause damage by:
- Their collapsing on top of the roof or walls perpetrated by hurricanes or excessively high-force winds
- Falling over caused by softened soil around the roots after a heavy rainfall.
- Easily transferring fire from burning branches caused by lightning or a careless person’s cigarette.
On the positive side:
- I am close to a hospital
- The further-offset surrounding trees do protect me against high winds that you might expect to cause damage when you’re in an open plain or desert environment.
- The roof is fireproof metal as is the skirting around the base
- The lot and surrounding area slopes down into a surrounding valley so there is no chance of flooding
To get an insurance policy on my home, my agent had to search far and wide. It was difficult to find a company that would even quote me for the area where my home is located. She came up with a company that charged me $2,400. for the first year of coverage. The policy included a hurricane deductible amount of $4,400. That means the replacement coverage starts after that figure is exceeded. It was a lot of money! My daughter, bought a home in the mountains of Tijeras, New Mexico shortly after I bought mine. She was charged only $600 for insurance for a similar home far from even basic services (it has smaller square footage, but with a separate guest house). She is remote enough that she can’t even get proper cellphone service.
Location, Location, Location!
It really depends where you live. So I set out to find ways to cut that cost. It was an amount which added $200. a month to my mortgage payment. When the policy came up for renewal the following year, I had my agent do another search. She looked for any new entrants into the area for providing homeowners insurance. It turns out she was able to find a firm called Florida Specialty Insurance Company.
Their quote and subsequent coverage slashed my cost down to $1,600. per year. This was still high, but saved me $800. per year. That translated to a monthly cost that was brought down to $133.33. The deductible for hurricane coverage is still high, $4,400. per incident. That cost is controlled by the State of Florida. I can live with that since I have already been through 2 hurricanes in the area (and Tropical Storm Alberto as I write this), with no damage. There is no flood insurance, but I don’t need it and water buildup is not a factor.
UPDATE: The following year, after writing this article, Florida Specialty Insurance Company (FSIC)raised my rates by $69. for a total premium payout for 2018/2019 of $1,669. That was okay because I expected a small increase. It amounted to a monthly addition to my mortgage payment of little over $5.00. But I feared the potential increase for the 2019/2020 premium.
When I got the bill, I was shocked. The yearly stipend jumped to $2,564, an $895.00 per year increase. That meant a jump in escrow withholding to the amount of a little over $74.00 a month. This tabulates to a 13% addition to my mortgage payment.
I remember getting a competitive quote from the Farm Bureau that was comparable in price to the original FSIC rate. Since the price was so close to my existing policy rate, I chose not to make the transfer. But after Hurricane Michael hit our area in 2018, I was getting nervous and requested another quote from the Farm Bureau.
The new quote came in April of 2019, and wow! It jumped too, hitting a figure of $2,545. That increase made me realize the Hurricane was seriously affecting the new pricing of all the known insurance providers for my area. The big problem was that I received other bids that were even higher.
So I tried one more time to locate a reasonably priced insurance provider. Fortunately, I was able to locate a broker situated in Chicago that gave me the pricing I was looking for. The name was was KIN Insurance and they were able to provide me a new policy from a company in Deerfield Beach, Florida called People’s Insurance Trust. That price turned out to be $1,597. And the coverages exceeded those spelled out by FSIC.
The point is that you never should give up. Keep looking and find what meets your needs. It is never too late.
The inclusive details of how my policy costs are calculated are broken down to show me where I can save additional money in the future. I had the home inspected professionally while I was back home in Ft. Lauderdale (before I even saw the interior myself) and he said he could do a wind mitigation review of the house. That means he provides an additional review which focuses on specific items that would help a home withstand damage from hurricane force winds and rain such as:
- Window protection
- Entry door design
- Hurricane strap tie downs
- Roof construction and coverings
Compliance with any or all established testing standards would help further reduce my insurance costs. But I would have to install hurricane straps from roof rafters to wall framing to get a favorable rating for that issue. A future project for that is scheduled when I have the funds.
Since I live in hurricane country, protecting doors and windows from wind and flying debris can be a big factor. I have been through 8 hurricanes, including Katrina, and watched damage take place all around me. In Wellington (West Palm Beach), Florida, I watched shingles being torn off my roof, front doors blown open, my long fence go down 3 different times, and flood waters creeping up to my door steps. Right here I probably am inviting the question : “Why didn’t you evacuate?” Because I have always been able to calculate the risk of riding out the storm against the possible damage caused to a vacated house. Besides, I absolutely hate the idea of being out on the open road, buried in crawling traffic, and having the storm bear down on you before being able to fully leave the danger zone.
Getting back to protecting openings in a house, corrugated aluminum shutters are an option. I could do that to protect all openings here at my current house for protection, and that would save me about $15 to $20 per month. But I will probably go with plywood panels which can attach to your house with special clips available at home improvement centers. My goal is to get down to around $100. cost per month. This is still high, but manageable within my limited budget. I will explore further cost reductions as time goes on. I still consider $1,600 a year excessive. After dealing with this homeowners insurance issue, I felt I could move on. My next goal was property tax reduction. I will address that topic in my follow-up article.
I am requesting that my readers click on the links provided and download a sample read of each book and give a review on Amazon. You will have free access to the first four chapters of each book. My hope is that you will like the story lines enough to obtain either an eBook version or a paperback copy that you can put on your bookshelf when you are done.