Don't be tempted to reduce your homeowners insurance

Are you properly insured at your house? You may have seen a number of stories about reducing your homeowners coverage because decreased home values may have left you over-insured. No way!

The cost to rebuild a house following a substantial or total loss is so high per square foot that you're probably under-insured.

So you must read the coverage limits when your policy comes up for renewal every year. Let your insurer know if there's no way you could rebuild your house for the specified amount. Note the name of the rep you speak to and the date/time of the call. That way if your insurer refuses to raise your limits and a catastrophic loss happens, you've already begun building a case against them.

On a related point, I advise homeowners that they can save big bucks by bumping up their deductible to $1,000 or higher on their homeowners insurance.

My rationale was twofold: First, a $1,000 deductible would prevent you from making small, piddling claims against your insurance. Second, you would pay much less in premiums in return for taking that higher deductible.

The penny-pincher always takes big deductibles. Don't have the $500 deductible of yesteryear. Today, insurance can only be used in the case of a catastrophic loss. It's a "use it and lose it" kind of thing. I saved 37% on my last renewal by having the highest possible deductible that my insurer would allow.

Finally, there's no excuse for not buying flood insurance through the National Flood Insurance Program if you live in or adjacent to a flood plain.

Flood insurance is subsidized at extra-cheap rates by your fellow taxpayers and covers damage for up to $250,000. Premiums tend to be as low as $100 annually up to $400 annually. Renters can buy a special version of flood insurance that's also subsidized.

Please note that insurers will not offer you additional coverage unless you first have this separate coverage from the feds. And if you're hit with a catastrophic flood, your basic homeowner's insurance won't pay for the damage.