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Budgeting For Repairs Could Help Keep Home Insurance Rates Low

In the event you have a problem in your home that needs repair, it's necessary to assess the damage and decide on a path forward. For some, this could mean calling their insurance companies to help pay for the costs of a repairman as well as the structural damage incurred. However, for other issues, it could be better to settle the matter yourself and pay for the expenses out of pocket.

This is due to the fact that every home insurance claim you file has the ability to increase your monthly premiums because you are demonstrating to your provider that there are problems within your home. When this occurs, providers will have to pay out more money to cover the costs of the incident, and if these instances occur frequently, then you could send a signal to providers that you're not taking care of your home.

By setting money aside to use for emergency repairs or maintenance expenses, you can cover the costs yourself rather than going through your insurer. The problem is that most homeowners don't budget for such expenses in advance and are left pulling money from their savings or having to file an insurance claim.

Ignoring budgets

A survey from HomeServe USA found 60 percent of homeowners do not budget for home repairs at all. Further, about 35 percent of respondents indicated they wouldn't have enough money to replace their home's heating systems if if their heat malfunctioned.

These numbers are representative of a large swath of the American population who don't have the financial savvy to plan out their future expenses. As a result, small, unchecked issues can turn into large conundrums with exorbitant fees.

"While everyday expenses such as utility bills are top of mind with homeowners, a hidden danger to their budgets can be the cost of unanticipated home repairs, such as a heating system breakdown or water line break," said HomeServe USA CEO Tom Rusin. "The cost of a water line replacement, for example, averages $2,200 nationally, and replacing a heating system can cost thousands.

"Because many homeowners aren't budgeting for these unexpected expenses, it might make sense for them to consider a service repair plan for a fixed monthly fee to provide financial certainty and avoid the surprise of a costly system repair or replacement," he added.

A large amount of money is usually not needed in most home repair cases, so it's not pressing to direct a sizable chunk of your paycheck to an emergency account; however, you should have a backup plan should property damage occur. A separate account holding even a few thousand dollars can be beneficial because it can help cover minor repair costs and give you a financial cushion so you're not having to scramble to come up with the money.

What to do

If the problem is large, like a complete plumbing failure or severe structural damage, then a call to your insurance agent is probably needed. For more manageable issues that can be addressed in a day's time, Angie's List suggested speaking with several different contractors and getting estimates to see how you can fix the problem relatively inexpensively. Don't settle for the first quote you receive because there are likely a number of competitors in your area that would able to handle the same task at a cheaper rate.

By being proactive and making a commitment to your home and your finances, you can stay on top of any repair or maintenance problems as they arise. Speak with your insurance agent to see how you can save money on your homeowners insurance by filing fewer claims.

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