How to Select the Right Home Fire Insurance on a Tight Budget

A long time reader wanted to share this post with you and it makes me feel guilty, because I do not have proper insurance on my home and that can really screw me over in the long run. I gotta get my act together and do it ASAP. For those that are trying to get fire insurance but are trying to save costs, read more to learn about it.

Managing your household budget is all about paying attention to the little details. No cost goes unnoticed, and every expense must be justified. Living a frugal lifestyle encourages you to save whenever and wherever you can so that you have more to spend on yourself and your family. But when it comes to fire insurance coverage, you have to tread carefully before you start adjusting your policy.

Every year, the cost of your home insurance policy increases. Finding out you have to pay more yet again can make it tempting to ask your broker about trimming your premiums. But that can have unintended consequences and cost you if you ever have to make a fire damage claim.

Can You Afford Lower Premiums?

When you’re shopping for insurance policies or talking to your broker about adjusting yours, you have to consider what’s covered by an insurance policy and how changing your premiums can reduce the financial help you receive in an emergency.

The main coverage areas for home fire insurance are Structure, Contents, and Additional Living Expenses. They cover your expenses for rebuilding your home, replacing your belongings, and the costs associated with living elsewhere while your home is restored.

Each of these coverage areas has its own limits. If your costs exceed those limits, you’re responsible for paying them. That can be a very expensive proposition if you’ve lost everything in a fire.

There is also the type of coverage you get. Replacement Cost policies come with higher premiums, but they pay out the amount it costs to replace building materials and personal belongings. If you have an Actual Cash Value policy, you will only receive a portion of those costs, even if the total cost remains under the limit.

How Fire Insurance Claims Work

If your home was damaged by fire, you need to file a fire insurance claim. A loss adjuster working for the insurance company will review the extent of the fire and smoke damage, lost contents, and the repairs that need to be made. With this information, they make a recommendation to the insurer, who will then make you an offer.

In the event of a total loss or significant damage to your home, you run the real risk that costs will exceed your coverage limits. If that’s the case, you need to make sure that every repair and expense you’ll face is considered by the insurer and that you receive compensation up to that limit.

Alternative Ways to Save on Insurance

You don’t want to reduce your coverage, but you still wish you could save on those insurance premiums. There are still ways you can safely save on your everyday costs:
  • Raise your deductible, which is the amount you pay before insurance kicks in. Just make sure you have enough saved. 
  • Review and update your policy annually.
  • Understand that you don’t need to cover the market value of your home but its reconstruction costs.
  • Make upgrades that will assure the insurance company, such as installing a new roof, a better security system, or a home sprinkler system.
Cheaper home insurance can wind up costing you if you have to make a fire insurance claim. Think twice before jumping for a cheaper policy.

Penniless Parenting

Mommy, wife, writer, baker, chef, crafter, sewer, teacher, babysitter, cleaning lady, penny pincher, frugal gal

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