16 Simple Ways to Cut the Cost of Your Homeowners Insurance
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Buying homeowners insurance is essential to help protect against losses that affect your house or its contents. In fact, a lack of adequate insurance coverage could be one of the biggest money mistakes homeowners make in the event that something goes wrong.
Unfortunately, it can get expensive to pay insurance premiums year after year. And this can be very stressful if you feel forced to choose between unaffordable premiums or inadequate protection for your home or possessions.
If you’re hoping to figure out how to save on homeowners insurance, the good news is you have multiple options. In fact, here are 16 tips you can try out to ease your money anxiety by lowering the price of your insurance coverage — without compromising on the coverage you need.
Insurance premium costs vary by provider. Comparison shopping among several different companies is one of the key ways to save money. After all, if one insurer offers similar coverage as another company but charges hundreds of dollars less per year, you want to find that out before buying a policy.
Aim to get multiple insurance quotes from several different insurance providers before you commit to buying a policy from any one insurer. Make sure you get quotes for the same type of coverage, with the same coverage limits, so you can accurately assess who is offering the best deal overall.
Bundle your policies
Many insurers provide a discount if you bundle your home and auto insurance, or bundle other insurance policies you purchase. Bundling means you buy multiple insurance policies from the same company. For instance, you might purchase your car insurance and homeowners insurance from the same insurer. While the amount you save varies by company, you could potentially lower premiums by up to 20%.
Bundling can not only cut costs, but it can also make it much more convenient to obtain coverage and manage your policies because you avoid the hassle of working with multiple insurance companies.
Increase your deductible
Like most kinds of insurance, homeowner’s policies typically have deductibles. Policyholders have to pay whatever their deductible is in the case of a covered loss. Your insurer pays for damages above the amount of your deductible.
For example, if your home incurs $10,000 of damage after a tree falls on it and you have a $1,000 deductible, you would have to pay for the first $1,000 in repairs and the insurer would then pay out the remaining $9,000.
Policies with higher deductibles cost less. As a result, you likely have the option to raise the amount of your deductible in order to reduce your homeowner’s insurance premiums. The downside is that this would lead to larger costs you must pay when you make a claim. You need to consider whether you would be better off paying more upfront in case of a problem or being forced to come up with a significant amount of money after a disaster.
Add features to protect your home
Adding certain safety features to your home can reduce the cost of home insurance by reducing the likelihood of a covered loss that your insurance company would have to pay for. Some of the features you could add to your home that could reduce insurance premiums include the following:
- Home alarm system
- Fire sprinkler system
- Smoke detectors
- Carbon monoxide detectors
- Deadbolt locks
- Pool fencing
The specific savings that each feature provides will vary depending on the upgrade and your insurance company’s policies. Talk to your insurance agent to find out how long it would take for your upgrade to pay for itself in premium savings.
Keep in mind, adding these features could also make your property safer for your family as well, so they may be worth paying for even if it takes a while to break even.
Make home improvements
Certain home improvements can also make your home less likely to be damaged by a covered event.
Taking steps such as replacing plumbing or upgrading the heating or electrical system could reduce premiums for an older home — sometimes substantially. For example, the premium savings could top 30% for a complete overhaul to your electrical system.
Making these types of upgrades can help reduce the chances of damage from a burst pipe, a fire due to faulty electrical, or similar problems. Any time you reduce the risk of a claim, your insurance costs should be reduced as well.
Stick with the same company
Switching your insurance can make sense if you find a cheaper quote. But remaining with the same insurer can actually reduce your premiums in many cases.
That’s because many companies provide loyalty discounts. These can reduce your premiums each year you remain a customer. For example, Allstate might cut your premium cost by 10% for each year you keep your policy with them.
Pay for your annual policy in full
In many cases, you don’t have a choice of when or how to pay for your insurance coverage. That’s because your mortgage lender may require you to make payments toward it as part of your monthly mortgage payment. The insurer collects the money over time and then pays the insurance costs on a set schedule. The mortgage company does this because it’s in their best interests to make sure you can afford to insure the home.
However, if you don’t have a mortgage or if you waive escrow (which some lenders allow), you may have a choice of paying your insurance bill monthly or once per year. If you have this choice, it’s common for insurers to reduce your premium cost if you pay annually.
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Upgrade your roof
An upgraded roof may reduce the risk of many potential problems with your home.
If you put on a new roof that’s hail, fire, and/or impact resistant, you should be able to reduce the cost of your homeowner’s insurance. This happens because you’re minimizing the chances of certain common types of damage that your insurer would have to cover.
Stay on top of your credit score
It’s common for homeowners insurance companies to check your credit score and credit report and use the information on it to assess how responsible you are — and how risky it is to insure you.
While some states have outlawed or limited this practice, there’s a very good chance that your credit will affect your homeowner insurance premiums. As a result, monitoring your score and report and aiming to improve your credit history could help to reduce your home insurance rates.
Review your coverage limits each year
You have some choices when it comes to the maximum amount of coverage you purchase. You’ll decide between replacement value and market value insurance (with replacement value paying to rebuild what you have and market value paying only for the current fair market value of it).
You can also select what dollar amount of property protection you want. That’s the maximum amount the insurance company would pay you to replace your personal property if it was lost or destroyed. And you can choose how much liability protection you want. That’s the maximum amount the insurer would pay if someone got hurt on your property and made a claim against you.
If you reduce your coverage limits, you can typically lower your premiums. But you put your assets at greater risk since you might not have enough money to pay to replace your possessions or respond to a lawsuit.
Call and ask about additional discounts
Most insurers offer many kinds of discounts. You may not be aware of all of the savings you are eligible for. It doesn’t hurt to call at least once a year and ask whether there are any opportunities to reduce your costs.
Choose a home in an insurance-friendly location
If your location is a safe one, then the risk of insuring you is lower and your premiums are lower as a result.
If you want to keep premium costs as low as possible, be strategic about where you purchase your home. Buying a property near a fire hydrant, in a low-crime area, or in a gated community could help you keep insurance costs down.
Consider avoiding small claims for inexpensive fixes
While your insurance may pay for minor repairs if they have a covered cause (and you’ve met your deductible), it’s often not worth making a claim for small fixes.
That’s because making a claim on your policy could make your insurer view you as a riskier customer to insure. Your policy premiums might go up as a result — sometimes as much as 20%. It’s not usually worth paying higher premiums for years just to get a few hundred dollars from your insurer to pay for repairs you could cover out-of-pocket.
If you live in an area prone to a specific natural disaster such as fires or hurricanes, bolstering your home’s defenses against those disasters could significantly reduce your insurance costs.
This could mean adding storm shutters, for example, or making your roof or windows impact resistant.
Install an automatic water shut off
Water damage is one of the most common reasons for insurance claims. Installing an automatic shut-off or leak detection system can reduce the risk of serious damage by ensuring your water is cut off when a leak happens.
These systems work by sensing moisture or continuous flow of water and turning off the water to your home. By stopping the water in its tracks, they can lessen the damage that normally results from things like a broken refrigerator line or burst pipe.
Consider flood insurance
Most homeowners insurance policies exclude flood damage or charge a lot for separate coverage if you live in a flood zone. Purchasing a separate flood insurance policy could potentially save you money by buying broader protection from a dedicated flood insurance provider.
The bottom line
Budgeting can be difficult enough without overpaying for insurance. The good news is you now know how to save money on homeowners insurance so you can ensure your premiums are as affordable as possible.
Aim to implement these tips as soon as you can so you can keep your monthly bills low while still limiting your risk of loss if something goes wrong at home.
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