Homeowners' insurance isn't a luxury, it's a necessity. In fact, most mortgage companies won't make a loan or finance a residential real estate transaction unless the buyer provides proof of coverage for the full or fair value of the property (most of the time this is the purchase price). In this article, we'll show you some simple actions you can take to make sure your homeowners' insurance is sufficient for your needs.

Homeowners' insurance can be very expensive. Those that live in high-risk areas such as close to major waterways, known earthquake fault lines or other high claims areas will pay the most for coverage. In fact, those in high-risk areas are often forced to pay annual premiums in the many thousands of dollars. But even homeowners in relatively sedate, suburban neighborhoods (with property values around the national average of $210,000) could pay between $500 and $1,000 a year for a basic policy.

The good news is that although you can't (and shouldn't) avoid purchasing homeowners' insurance, there are ways to minimize the cost.

Here are six ways to make sure you get the right coverage and consequent compensation for your home:

1) Maintain a Security System and Smoke Alarms: A burglar alarm that is monitored by a central station, or that is tied directly to a local police station, will help lower the homeowner's annual premiums, perhaps by 5% or more. In order to obtain the discount, the homeowner must typically provide proof of central monitoring in the form of a bill or a contract to the insurance company.

Smoke alarms are another biggie. While standard in most modern houses, installing them in older homes can save the homeowner 10% or more in annual premiums. Of course, even more importantly, in case of fire, they could save your life!

2) Raise Your Deductible: Like health insurance or car insurance, the higher the deductible the homeowner chooses, the lower the annual premiums. However, the problem with selecting a high deductible is that smaller claims/problems such as broken windows or damaged sheetrock from a leaky pipe, which typically will cost only a few hundred dollars to fix, will most likely be absorbed by the homeowner.

3) Look for Multiple Policy Discounts: Many insurance companies give a discount of 10% or more to their customers that maintain other insurance contracts under the same roof (such as auto or health insurance). Consider obtaining a quote for other types of insurance from the same company that provides your homeowners' insurance. You may end up saving on two annual policy premiums.

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