In part one of this four-part series, I explored the importance of maintaining auto insurance during a recession. In this second installment, I will focus on the absurdity of cash-strapped homeowners who may be tempted to reduce or cancel home insurance to save money.  Mother Nature doesn’t care that there’s a recession on-she can, and does, strike when you least expect it. That’s why reducing or canceling home insurance is a very, very bad idea.

If your home is completely destroyed, obviously you’re in deep financial trouble if you don’t have enough home insurance to rebuild. But even if your home is only partially damaged after a violent snowstorm or vicious tornado, can you afford a few thousand dollars out-of-pocket to repair the damages?

Remember that natural disasters aren’t the only threats. Danger can come from anywhere: burglars, arsonists and vandals; a drunk driver who smashes his SUV into your living room; dog bites, slip-and-fall accidents and other liability claims; or a grease fire that spreads into the dining room. But not all homeowners cancel their home insurance. Some opt to cancel “specialty” policies like flood or earthquake insurance instead. This is a big no-no. home insurance does not cover damage caused by floods, earthquakes, landslides and other exceptional natural disasters, leaving homeowners–especially those who live in high-risk areas–extremely vulnerable to loss.

Rather than canceling or reducing coverage, here’s a better idea: Keep your existing home insurance coverage at a fraction of the price. Easier said than done, right? Not necessarily. Here are a few no-nonsense tips to help you reduce your home insurance premium without squeezing a single ounce of coverage from your policy:

• Raise your deductible. If you can afford it, raising your deductible from $500 to $1,000 or even $2,500 could reduce your premium by 20 percent*.
• Call about discounts. If you live in a new home, have a home security system or purchase multiple policies (auto/motorcycle and home) with one insurer, you’re probably eligible for a discount.



• Shop for the best home insurance premium. If you’re paying too much with your current insurer, compare home insurance quotes and find similar coverage for less.
• Lastly, a non-insurance tip: Go ‘green’ on your utilities! A few ideas include turning down the thermostat a degree or two in winter; using ceiling fans instead of air conditioning in the summer; installing low-flow showerheads to reduce water usage; buying energy-efficient appliances; and turning off lights and electronics when they aren’t in use. These small tips can save you big on your household bills, leaving you with more money for expenses like home insurance.

It’s a dangerous world out there. And while you can’t prevent a massive hurricane from destroying your home, you can protect yourself against massive financial fallout with a home insurance policy.  Stay tuned for part three of our series when I tackle the health care crisis and provide advice for the more than 50 million Americans currently without health insurance.