RISK REPEATING

One of the ways to save money on insurance is to be ahead of the curve. If you are able to find the true current and future value of a risk before an insurance company does, than you will be able to buy a policy for less than it is actually worth. This especially rings true with home and property insurance. The risks to these assets are routinely valued based on the area's history of risk — that is, how prone an area has been to disaster in the past dictates how much you will have to spend to purchase insurance now.

THE PRICE OF DISASTER

For example, homeowner's insurance in New Orleans is much m ore expensive now than it was before Hurricane Katrina. Prior to 2004 New Orleans hadn't experienced that type of large-scale catastrophic event, so insurance could be bought at a reasonable price. There are many places throughout the world like the city of New Orleans; places that haven't had a high-risk history, but that will experience major disasters. Of course, we can't see the future or be as prescient as Nostradamus; however, often times being aware of your surroundings and global trends can save you a lot of money when it comes to insuring your home.

RECOGNIZING RISK

The key to assessing risk, is to take a broad perspective of where you're living. Take the risk of wildfire as an example: Do you live in a heavily forested area? If so, when was the last time that forest experienced a large wildfire? Or do you live in the bottom of a canyon or a place that often experiences high winds? Has their been an epidemic of bark beetles in your area that have left the trees ripe for burning? These are just a few of the questions that could be asked to decide whether your home is at risk of being caught in a wildfire. And there are similarly probing sets of questions that can be asked for each risk that may threaten your home or property. It's much better to think hard and ask those questions up front than pay a higher price later.