Time for a home insurance tune-up

In the first weekend of October, massive floods brought by Hurricane Joaquin rocked the East Coast, bringing torrential rains to much of the mid-Atlantic region. Flooding from storms such as this one are some of the costliest for U.S. property owners and insurers, and bring an average burden of $50 billion per year according to the Insurance Information Institute. Fortunately for South Carolina, where the brunt of Joaquin was focused, $50 billion in property was secured by flood insurance as of July 2015. However, according to a study by the III, only 14 percent of American homeowners had a flood insurance plan in effect. Now is as good a time as any to review your homeowner's insurance policy to ensure comprehensive coverage, in addition to sniffing out any possible savings you've overlooked.

A different kind of check-up

According to HouseLogic, it's a good idea to perform a "check-up" on your home insurance annually to certify you're fully covered, and to add, eliminate or otherwise change your policy to maximize savings. If you work with an agent, call or schedule a meeting with them to make this happen. Some providers may have an online portal that can streamline this process, too. Remember, some new insurance policies may require a home inspection.

Start by seeing what kind of insurance you have and what exactly it covers. As insurance lawyer Jerry Oshinsky told HouseLogic, the most useful type of coverage is replacement cost coverage. This will reimburse you for any accidental losses of property up to a certain dollar amount. One attractive optional type of coverage is "extended cost coverage," which will reimburse an additional percentage of costs that exceed a predetermined deductible.

Some policies are known as "actual cash value" coverage, which will factor in depreciation when determining reimbursement amounts. That means any item lost in a fire, for example, will only be covered at its current market value, which is typically lower than the amount you originally paid for the item. Some may view these policies as less attractive options, but this may not always be the case. If you can save 25 percent or more on premiums by choosing an actual cash value plan instead of replacement cost, the cheaper plan may be worth it. In that case, it's not a bad idea to save a little extra to compensate for the depreciated value of your possessions.

Don't forget that homeowner's insurance only covers your actual house and most of its contents, and does not generally cover separate structures such as a detached garage, pool or storage shed. Luxury items are also generally not fully covered in replacement cost coverage, and are instead capped at a certain amount. If you have items that are particularly precious, you may want to consider another policy for them, or at least ensure they are kept safe.

Keeping costs low

With all this in mind, your next thought may be how you can lower your premiums and be certain you are only paying as much as you need for insurance. According to HouseLogic, the general rule of thumb on insurance dictates that lower premiums mean high deductibles, and vice-versa. Understand that homeowner's insurance is most affordable when it's used to protect against major disasters and accidents, the kind that make your home uninhabitable or completely destroy it. Ideally, you should be able to pay for minor accidents and mishaps out of pocket, which eliminates the need for a low deductible.

You should take advantage of special discounts as well. All major insurers will offer lower prices for certain groups, like firefighters, teachers or military personnel. Even bundling your homeowner's insurance with a car, health or life insurance plan from the same provider can eliminate 20 percent or more of your premium according to InsuranceQuotes.com. Not a bad deal for savings-savvy homeowners.