How to Save Money on Coverage in Maryland

With homeowners insurance, more populous states tend to have higher costs. This factor combined with Maryland's proximity to the coast makes the state one of the more expensive areas in which to insure a house. According to the National Association of Insurance Commissioners (NAIC), Maryland is the 23rd most expensive state for homeowners premiums. Premiums can vary significantly by the area of Maryland in which you live, however. For example, residents in Montgomery County, which is right next to Washington, D.C., pay premiums that are twice as high on average as those of Frederick County, which is only one county north. How you structure your policy can also make a difference with your premiums. Read on for tips on how to build a policy that offers adequate protection at an affordable cost.

Structuring Your Plan

When you purchase insurance, you will work with your agent to structure a policy that meets your individual needs. Below, we've summarized the basic components of a policy and offered suggestions on how to minimize costs.

  1. Coverage amount. This is the face value of your policy, or the amount you would receive if your house was completely destroyed. Your insurer or mortgage lender will usually have your dwelling professionally appraised to arrive at this number. To keep your costs reasonable, make sure you insure your dwelling for what it would cost to rebuild it, not for its real estate value. A home's real estate value will include the value of the property on which it was built, which will unnecessarily inflate the amount of coverage you purchase.
  2. Deductibles. You will have to decide on the level of your deductibles, which are the portion of the claim for which you must pay out of pocket. Low deductibles will minimize your out-of-pocket expenses in the event of a loss, but they will also drive up the costs. To keep your premiums low, set your deductibles as high as you can afford.
  3. Liability coverage. Having adequate liability protection is integral to your long-term financial security, so you don't want to skimp on this. A single lawsuit could wipe out your savings and put your assets, like your house and your vehicles, in danger without adequate liability protection. One way you might save on liability is to keep the liability coverage on your costs low and instead buy a large umbrella liability policy. With many insurers, umbrella coverage is cheaper than upping the liability limits of your plan.

Capitalizing on Discounts

Discounts are a very effective way to save money. Certain discounts may qualify you for up to a 20% reduction on your premiums. For example, some areas of the state have extremely high crime rates, which in turn lead to more claims. If you live in such an area of Maryland, you might consider installing safety devices like a burglar alarm, deadbolts, etc. to protect your dwelling and qualify for valuable discounts.