Saving Money: 6 Ways to Lower Homeowners Insurance Costs

Homeowners may be benefiting from lower mortgage rates, but many are getting hit with higher homeowners insurance premiums. However, there are ways to lower these costs, in some cases, by as much as 10% to 20%. Here are six strategies:

1. Raise Your Deductible: By assuming more of the risk and reducing the possibility of making small dollar claims, you can shave a significant portion from your premium.

2. Insure Only Your House, Not the Land: A portion of your home’s market value is the value of the land itself. Even if your house was completely destroyed, its land value remains intact. Your house and its contents are what need to be protected from fire, theft, and other hazards. To determine how much homeowners insurance you need, work with your insurer or an expert in the building industry to calculate how much it would cost to rebuild your home and replace its contents.

3. Make Your Home Safer: Insurers typically offer discounts for installing safety devices, such as smoke detectors, deadbolt locks, and burglar alarms. Some companies offer even bigger discounts for sophisticated alarm systems connected to the local police and fire departments. Another way to save is to avoid risks that drive up premium costs, such as having a swimming pool or trampoline on your property.

4. Bundle Policies With One Insurer and Remain Loyal: Many insurers offer discounts to customers who buy more than one policy from them. But before you bundle your homeowners, auto, and personal liability policies with one insurer, make sure the price is lower than buying from separate companies. If you’ve had your coverage with the same insurance company for several years and seldom file a claim, ask the company for a discount based on longevity and your claims record. Many insurers offer lower premiums to customers of five or more years.

5. Ask About Other Discounts: Make sure you’re receiving all the discounts to which you’re entitled. Factors such as how close you live to a fire station or the type of material used to build your house may make you eligible for lower rates. Some companies even offer discounts to retirees, knowing that their presence at home may deter thieves and enable a quick response to fires and other emergencies.

6. Shop Around: No matter how long you’ve been with your insurer don’t assume you’re getting the lowest rate possible—compare prices and discounts.

Information-Shopping: Key Investor Linkson the Internet

Fourteen key investor links can be found on a new Web site dedicated to providing investors with easy-to-use information on where to check out financial professionals, how to report investment fraud, how to file arbitration and mediation claims, and the best help for dealing with other major problems—including broker bankruptcies, identity theft and 401(k) claims. The new site,www.helpforinvestors.org, is sponsored by the Alliance for Investor Education, which was founded in 1996 to facilitate a greater understanding of investment basics. The Alliance consists of 18 different organizations (including AAII) representing the full spectrum of the investment community.

Source: Alliance for Investor Education.

Living Together? How to Safeguard Your Un-Marriage

A couple that lives together but is not legally married may run into substantial legal difficulties if one partner dies without leaving a will. If an unmarried person dies intestate (without a will), the courts recognize only children and other blood relatives as heirs. Unmarried couples need to clearly spell out their wishes in writing. To protect you and your partner’s financial commitment to each other, you should consider the following documents.

• Wills: A will is your first line of defense to ensure that your assets are distributed according to your wishes. If you die intestate, state law determines who shares in your estate, generally in the following order: spouse, children, parents, siblings, other close blood relatives. Your spouse, to the courts, does not mean your partner. IRAs, 401(k)s and life insurance require you to designate beneficiaries on their enrollment forms. Thus, they are not subject to probate, and the most current beneficiary named on file for these plans would be recognized, regardless of what your will might mention. Also, jointly held property (with rights of survivorship) automatically goes to the surviving owner, regardless of any provisions in the will.

• Living Trusts: To diminish the possibility of a contested will, you can place assets within trust vehicles, such as a revocable trust, also known as a living trust. You establish the trust during your life, and it remains changeable while you are alive and competent. Assets placed in a living trust avoid probate court.

• Trusts for Estate Planning: If you and your partner hold substantial assets, you may want to consider different kinds of irrevocable trusts for estate planning purposes. Irrevocable trusts should be drafted flexibly to accommodate changing circumstances. Experienced estate planning attorneys should always consult experienced trust professionals when considering trusts.

• Other Important Documents: A health care power of attorney allows you to name your partner as agent to make all healthcare decisions; a separate power of attorney for financial decisions gives your partner (agent) the power to do anything you could ordinarily do for yourself, such as pay bills; and a living will contains your wishes for all end-of-life considerations.

No Hedging onHedge Funds

Q: What are your thoughts on hedge funds?

A: Hedge funds are the current hot topic. Folks, if Warren Buffet is managing your hedge fund then you’ll do fine. Most hedge funds are not being managed by Warren Buffet; they are being managed by young bucks who don’t know what they are doing. And a lot of people are going to lose an awful lot of money.

—Ron Muhlenkamp, portfolio manager for the Muhlenkamp Fund and president of Muhlenkamp & Co. writing in the July 2005 edition of the Muhlenkamp Memorandum.