Money Rehab with Nicole Lapin - Home Insurance Hacks For Everyone (Even Renters!)

Episode Date: July 28, 2023

Homeowners insurance premiums are way up. Today, Nicole explains what gives, and how you can keep your costs low. And renters: don't skip this one! Contrary to popular belief, even if you're not a homeowner, you still need insurance. Nicole explains.

It is time to start thinking about holiday shopping, and I'll let you in on a little secret. Get everyone on your list something special from Justin Wine. Justin is legit my favorite wine to give and to receive. With a rich history of accolades, Justin produces exceptional wines and is proud to be America's number one luxury cabernet. Since 1981, Justin has been producing world-class Bordeaux-style wines from Paso Robles on California's Central Coast. As a pioneer of Paso, Justin Wines are what put Paso Robles on the winemaking map. Justin offers curated gift sets, library wines, magnums, and even custom-etched bottles. You can personalize the gifts with a custom message, icon, or logo. Go to justinwine.com and enter code MONEY20 at checkout for 20% off your order.

Justin offers the perfect holiday gifts for clients, colleagues, family, and friends. If you're looking for a special wine to serve at your holiday table, try Isosceles. That's Justin's flagship Bordeaux-style red blend. Whether you're a first-time wine drinker or a wine aficionado, Justin has a wine for everyone, every occasion, and every celebration. Be sure to check them out at justinwine.com and receive 20% off your order for a limited time. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand.

It's time for some money rehab. This summer, I've had the same conversation over and over with people from Florida, New Jersey, and California. And no, it's not what they're wearing to Barbenheimer, although that too. It's about why insurance rates are climbing like crazy and what they can do about it. Today, I'm going to share some do's and don'ts when it comes to getting the best price on your homeowner's insurance. Some of these tips are as easy as picking up the phone or not even doing anything. Others, to be honest, require a little bit of money and some time, but all of them will help you get the best deals on insurance in this increasingly expensive market.

Now, before we get to the list, let's take a look at the bigger question. Why the heck are insurance premiums going up? It comes down really to two factors, the rising risk of serious weather events like flooding and the rising cost of repairing homes after a serious weather event. Anyone who's tried to do a little home repair work recently can tell you that the cost of supplies is up and the homes themselves are more expensive than ever, basically leaving insurance companies on the hook for even larger payouts at a time when they're already paying out more frequently. Throw this all together and you get higher homeowner insurance premiums than ever. And renters, this applies to you too. Because unless you look around your place right now and

say you could pay out of pocket to replace literally everything, you should have renters insurance covering damages for disasters from home fires to leaking pipes to tornadoes. What renters insurance though doesn't cover is flooding from a natural disaster like a hurricane, earthquake or a sinkhole. So let's pick apart one disaster at a time. For flooding, you need to buy content insurance from the National Flood Insurance Program. If you rent in an earthquake prone state, you can buy a separate earthquake insurance plan. I have one.

Sinkhole coverage is difficult for anyone to get unless they live in Florida. As the most sinkhole-prone state, what a sad superlative that is, Florida requires all insurance companies to offer sinkhole coverage. Remember, renter's insurance doesn't just pay to replace your stuff. It might also cover hotel fees or the cost of needing to arrange an alternative place to live. So don't tune this episode out just because you aren't a homeowner. You still need insurance. Cool. So now that we're on the same page about everyone needing insurance, how do you get it? The first thing to do is call around for quotes or get an insurance broker. By the way, you don't have to pay insurance brokers. They get a cut from the insurance company. Getting a bunch of quotes has two benefits. First, you might be able to find a lower rate. And second, it puts

you in a stronger negotiating position with your current insurance company if you have one. You can go to them with a lower quote and be in a position of strength to negotiate a better rate for yourself. During the negotiation, ask if they have any loyalty programs that can help decrease your premium. If you've never made a claim or it's been five years since your last claim, you could ask them to lower your premiums on that basis. When you're calling around for quotes, don't miss out on calling your auto insurance provider because there are often bundle deals available. And do make sure your search window is very wide. Homeowners insurance and discount rates can be found in the most unlikely of places

like Costco. If you're a veteran, you might also be able to score additional specific deals for your experience. Being a member of the Bar Association or other professional organizations can also get you some pretty sweet discounts depending on the state. So dig deep when you're looking for these deals. And don't be afraid to increase your deductible. Nictionary note here, your premium is how much you pay each and every month to keep your insurance. Your deductible is how much you pay out of pocket for repairs before the insurance company picks up the remainder of the tab. This is a really careful balancing act. Filing an insurance claim is a colossal headache and it can make your insurance premiums go up. Someday I will talk about the hell

that I have gone through dealing with my own insurance company after my car accident. It has been a year and a half and I am still too mad to talk about it. Anyway, so what I'm saying is that if your damages are two grand or less, you may well want to pay out of pocket to make those repairs just to avoid the hassle of dealing with the insurance company and paying colossal premiums. But if you don't do this dance with a lot of care, it can backfire and cost you money. So take a look at your deductible and your emergency fund. Think about other expenses associated with a disaster, because being out of your home is really expensive. Let's say your kitchen floods,

God forbid, or burns or is hit by a tree. you're going to have to eat out a whole lot more while you're waiting for those repairs in your kitchen. So how much can you afford to pay out of pocket? And is that more than your deductible? If so, raising your deductible is one of the easiest ways to save money on your premium. So far, all of these tips are easy. They do require phone calls and a little bit of time. But this insurance situation at large, it's not going to get better anytime soon. I'm no public policy expert, but I've spent some time looking at this data and things over at the National Flood Insurance Program don't look great. 10 years from now, I'm not sure what the insurance landscape is going to look like. So if you live in a flood prone area, own your home and

want to continue to live there, it might be time to start thinking about investing serious money in making sure your home is ready to withstand whatever Mother Nature throws at it. A home is usually the most valuable asset you have. But beyond that, it's the place where you live. It's the place you keep your stuff and your memories. It's where you sleep. You want it to be, to use an old expression, safe as houses. The good news is that some fairly basic renovations will reduce the danger from common home damaging events and lower your bill at the same time. So do look at making basic updates to your home from a new fire alarm system or moisture sensor, which can save you a little money. Don't overlook bigger renovations here if you can. If you've ever been through a hurricane,

you know how big of a repair job that is and how the rebuilding process makes all of the materials you need scarce. Putting storm shutters on your house can help make it more robust in the face of a storm, easier to storm proof, and lower your insurance. And by the way, if you've made any home renovations that might help protect your house recently, be sure to notify your insurance company. A new roof, let's say, will probably drop the price of your premiums. Even updates to wiring and plumbing can lower your premiums. But before you do any of these renovations, check with your insurance company first to see what it will do to your premiums.

Any changes that increase the amount of square footage that needs coverage will increase your payments. Also, watch out for anything that increases your liability. If you're struggling with insurance payments now, this isn't the time to put in a new pool. Liability insurance is often bundled into homeowner's insurance, so attractive features like pools can increase your bill. And sorry kids, but you can even reduce your premiums by getting rid of that trampoline. If you own a home now, these tips can all help you reduce your bill. If you haven't bought a home and you're shopping around, be sure to check what the current owners are paying for

insurance. And if the house is uninsurable, don't buy it. Homeowner's insurance is a must-have with any mortgage, so you won't even be able to get a mortgage for an uninsurable house. For today's tip, you can take straight to the bank. If you live in a hard-to-insure area, look into FAIR plans. They're offered in 26 states. These plans offer a minimum of coverage, but they will help you keep your mortgage in the event that your private insurance company drops you. They'll also offer a little protection if disaster strikes.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention

with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.