Monday, April 4, 2011

Home Owners or Renters Insurance

Today is Money Monday here on the blog. I try to discuss something that will help us save a little money or spend more wisely each Monday. This morning I have been thinking about Homeowner's Insurance because we recently paid ours for the year. If you are not a homeowner then you should seriously consider purchasing renters insurance. It protects all of your belongings in the case of a fire, flood, etc. My brother's policy even protects his belongings that he stores in the trunk of his car. If something were to happen to the home or apartment you are renting, the landlord's insurance would protect only the building not any of your belongings and it would cost you an awful lot to have to replace them all.

Many of you pay your homeowner's insurance through an escrow account that is set up with your mortgage. Some mortgages require that you do it this way. Ours does not so we choose to pay it on our own. This gives us a little more control over how much we put aside every month.  The bank sets a certain amount aside every month out of what you pay them. They allow this to collect in an escrow account until the date that the bill is actually due. In most cases, they error on the side of caution and collect more money than is actually due in case the insurance costs go up. This means that many years you have put more into an escrow account than you really needed to and the bank was the one earning the interest on the money as it sat there all year before paying the bill.

We have learned to discipline ourselves to put the money aside each month into our own savings account. We see the bill come through so we know exactly what we are paying and we have also earned the interest during the year while we were waiting to pay the insurance company. It doesn't add up to a whole lot of savings, but it puts us in control and it makes it a little easier to change insurance companies when we decide to.

Every few years, I go through the steps to check the prices and coverages we can get trough different insurance companies. Last year I did this and figured out that by changing companies, we could increase our coverage amounts and actually pay over $600 a year less for insurance.

That $600 can go a long way when purchasing food storage, filling the emergency fund, painting the house, etc. I'm sure you could all find wise ways to spend an extra $600.  So check into what you are paying for insurance. You just may be pleasantly surprised.

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