Jeffrey Wade
Homeowners insurance is a necessity, but that doesn't mean it has to break the bank. With insurance premiums on the rise, it's more important than ever to find ways to save. Luckily, there are several strategies you can use to lower your costs without sacrificing coverage. From shopping around for the best rates and taking advantage of discounts to increasing your deductible and improving your credit score, there are numerous ways to keep more money in your pocket while still protecting your home.
| Characteristics | Values |
|---|---|
| Shop around | Compare quotes from multiple insurance companies to find the best deal. |
| Deductibles | The higher your deductible, the more money you can save on your premiums. |
| Bundling policies | Purchasing your homeowners and auto coverage from the same company can provide savings of up to about 30% overall. |
| Security systems | Installing a security system and smart home devices could save you money on home insurance. |
| Credit score | Improving your credit score can help lower your premium. |
| Group insurance | Check with your employer or any groups you belong to for group insurance options. |
| Discounts | Companies may offer discounts for having a monitored burglary or smoke alarm system, having other policies with the same company, and filing no or few claims in five years. |
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What You'll Learn
Shop around for the best deal
Shopping around for the best deal on homeowners insurance can save you hundreds of dollars. The price you pay can vary significantly depending on the insurance company, so it's worth putting in the time and effort to find the right policy for your needs and budget.
Start by asking your friends, checking the Yellow Pages, or contacting your state insurance department. The National Association of Insurance Commissioners (NAIC) website provides information on choosing an insurer in your state, including complaint data. Many states also provide information on typical rates charged by major insurers and consumer complaint frequency.
You can also use comparison-shopping sites such as Insure.com, NetQuote, and SelectQuote to research and compare different insurers' rates and offerings. Additionally, consider using an insurance marketplace like Policygenius, where you can compare quotes across multiple companies in your area by answering a few simple questions about your property.
When shopping around, be sure to review the types of coverage included in each policy. Basic coverage can vary between carriers, with some including extras in their standard policies, while others charge a premium for add-ons. For example, "loss of use" coverage is typically included in homeowners insurance policies, paying for additional living costs if you need to live outside your home during rebuilding after a disaster. However, options, add-ons, and separate coverages will generally increase the cost of a standard policy.
Finally, don't forget to ask about discounts. Many companies offer discounts for having monitored security or fire safety systems, purchasing multiple policies, maintaining a claims-free record, and more. Upgrading your home's security and safety features can not only qualify you for discounts but also provide peace of mind and potentially lower your insurance costs.
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Raise your deductible
Raising your deductible is one of the simplest ways to save on your homeowners insurance. A deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums.
Most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25%. For example, if you have a policy with a $3,000 annual premium and a $1,000 deductible, you could save about 24% by boosting your deductible to $2,500, 37% by raising it to $5,000, 47% by raising it to $10,000, and 53% by raising it to $25,000.
The downside of having a high deductible is that if you file a claim, you will have to pay that high deductible out of pocket. Therefore, it is important to ensure you will have that amount of cash on hand should you need to file a claim. You should also consider the frequency with which you make claims. The average homeowner files a claim only once every 8 to 10 years, so the risk of self-insuring may not be as high as you think. You could take the money you save in premiums and add it to your emergency fund each year so that you’re prepared when you do have a claim.
In addition, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. For example, if you live near the coast, you may have a separate windstorm deductible, and if you live in an area vulnerable to hail storms, you may have a separate deductible for hail.
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Bundle your insurance policies
If you need multiple types of insurance, such as home and auto, as well as renters or condo insurance, you can save money by bundling them together with the same company. Many insurance companies, including Liberty Mutual, Progressive, and State Farm, offer discounts for purchasing multiple insurance policies, also known as multi-policy or multi-line discounts. For example, Progressive offers an average discount of more than 20% for bundling home and auto insurance, while State Farm customers save an average of $1,073 annually. Liberty Mutual also offers savings when you bundle auto insurance with other products like renters, condo, motorcycle, and more.
Bundling insurance policies can lead to significant savings and make managing your insurance policies easier. With bundled coverage, you can manage all your policies in one place, access them through a single mobile app, and schedule automatic bill payments, reducing the chances of missing a payment. Additionally, you can save time by getting a bundled quote online or even from your phone with some companies.
Before deciding to bundle, it is essential to compare prices and shop around to ensure that bundling will provide the coverage you need at a lower cost. Contact your current insurance providers to find out how bundling will affect your premiums. It is also crucial to remember that cancelling one of the bundled policies might result in losing the multi-policy discount.
Overall, bundling your insurance policies is a straightforward way to save money and efficiently manage your insurance coverage. By combining multiple policies under one company, you can take advantage of discounts and simplify the management of your insurance.
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Improve your home security
Improving your home security is one of the most effective ways to save money on homeowners insurance. Here are some ways to do that:
Firstly, consider installing a home security system. This can include security cameras, motion sensors, door and window sensors, and alarm systems. Many insurance companies offer discounts for these security measures, as they help protect your home from potential burglaries and reduce the average loss from a single burglary, which typically exceeds $2,000. Some insurers provide discounts for specific safety and anti-theft devices, such as deadbolts, smart locks, and fire sprinklers. These devices can be part of a monitored security system or self-monitored by the homeowner.
Secondly, you can combine policies to receive a discount. Some companies that sell homeowners, auto, and liability coverage offer a discount of 5% to 15% if you purchase multiple policies from them. This approach, known as "multi-policy discounts," can be an effective way to save money on your homeowners insurance.
Thirdly, stay on top of home maintenance and safety. Communicate any significant repairs or renovations to your insurer, as this may lower your rates. For example, replacing your roof or modernizing your plumbing, heating, and electrical systems can make your home less susceptible to damage from windstorms, natural disasters, or water and fire damage.
Finally, shop around for insurance providers and compare rates. Different companies offer varying discounts and rates for homeowners insurance. By checking with multiple providers, you can find the best coverage and price that meets your specific needs. Additionally, ask about specific discounts they offer for security systems and devices, as these can vary between insurers.
By implementing these measures, you can improve your home security and potentially save a significant amount on your homeowners insurance.
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Improve your credit score
Improving your credit score can help you save money on homeowners insurance. A very poor credit score may lead to higher premiums, whereas a good or excellent credit score may help you save hundreds of dollars each month. Insurance companies may use your credit score to determine your eligibility and premiums, and a higher credit score may be viewed as less likely to file insurance claims.
- Understand your credit history: Identify factors that are negatively impacting your credit score. You can request a free full credit report from the main credit reporting bureaus to help you understand your credit history and identify any errors or discrepancies.
- Pay your bills on time: Late payments can negatively impact your credit score, so it's important to make timely payments on your loan and household bills. If possible, pay certain bills as a lump sum upfront to avoid monthly payments.
- Maintain a low credit utilization rate: Keep your credit utilization ratio low, ideally no higher than 30%. For example, if you have a credit card limit of $10,000, aim to use no more than $3,000 at once.
- Limit hard credit checks: Hard credit checks are performed when applying for a loan or credit card, and frequent checks can negatively impact your score.
- Avoid closing accounts: Keeping unused accounts open can positively impact your credit score, as the length of credit history is a determining factor.
- Build credit: Explore ways to build credit, such as adding new accounts and positive information to your credit reports.
By implementing these strategies and consistently working to improve your credit history, you can positively impact your credit-based insurance score and potentially lower your homeowners insurance rates.
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Frequently asked questions
There are several ways to save money on homeowners insurance. Firstly, shop around and compare quotes from multiple insurance companies to find the best deal. Secondly, consider raising your deductible, the amount you pay if you have to make a claim. For example, if you have a $1000 deductible, increasing it to $2500 could save you an average of nearly 12% a year. Lastly, ask about discounts; some companies offer discounts for having a monitored security system, having multiple policies with them, or having a good credit score.
You can contact insurance agents or company representatives to find out what discounts you may qualify for. Some common discounts include those for having a monitored burglary or smoke alarm system, having multiple policies with the same company, and having a good credit score. You can also ask your employer or any groups you belong to about group insurance, which can be a simple way to save money.
Yes, you can consider upgrading your home's security and making improvements to make it more resistant to natural disasters. For example, installing a security system and smart home devices or adding storm shutters and reinforcing your roof can often lead to savings on insurance. Additionally, review your policy annually and consider cancelling any extra coverage you may no longer need.
