Thanks to homeowners insurance, if something devastating should happen to your home, you’ll get the money from your insurance company to recover your losses (if you have the right kind of protection). You can use homeowners insurance to reduce or even eliminate your financial sufferings if something bad should happen to your home and possessions.
When you buy a homeowners insurance policy, you pay money, known as the premium, to an insurance company. The insurance company then invests your money, together with those of thousands of other insurance buyers, known as the policyholders, to earn a great rate of return.
By doing so, the insurance company will have the money to pay the financial losses, known as the proceeds, that you or other policyholders may suffer because of an unfortunate event.
When you buy an insurance policy to protect your home and belongings, you believe the risk of you suffering a major financial loss from an unexpected event… is greater than the premiums you’ll pay on the policy. And so you want to shift this risk to the insurance company. When you buy the right kind of homeowners insurance, you’ll gain security and peace of mind, knowing if a sudden disaster should ever happen to your home or possessions, or both, then your family won’t have to suffer financial hardships.
Although some policyholders think their insurance companies are making too much money from them, others think powerful and wealthy insurance companies enable them to sleep better at night, knowing the money will be available to pay their claims when they need to file them.
One of the biggest complaints many homeowners have about insurance companies is, even though they have been paying thousands of dollars in premiums over the years and have never made a claim, their premiums still keep on rising for no apparent reason. Please keep this important fact in mind, since insurance companies calculate the premiums you and other policyholders pay based on the claim history of all their policyholders, while you may have never made a claim, others may have made several.
The good news is, even though your premiums may still be increasing every year or every few years, most insurance companies do charge you a lower premium than what they charge a policyholder who has filed one or more claims. (For the policyholders who’ve made too many claims, their insurance company may not renew their policies when they expire, leaving them with no insurance protection at all. This puts them at enormous risk.)
To continue reading about the eight ways to save money on your homeowner insurance, click here.