Cut Home Insurance Costs

There are several ways to lower your house insurance costs. Firstly, you can increase your deductible, which is the amount you pay if you need to make a claim. You can also make your home more secure by installing a smoke detector, burglar alarm, or deadbolt locks, which may earn you a discount. Another way to save is by bundling your home insurance with other types of insurance, such as auto insurance. Improving your credit score can also help lower your home insurance premium, as insurance companies often use credit scores to determine rates. Finally, you can shop around and compare rates from different insurance companies to find the best deal.

Increase your deductible

Increasing your deductible is one of the quickest ways to lower your home insurance premium. A deductible is the amount you pay towards a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the lower your premium will be.

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 increase your deductible from $500 to $2,500, you could save around $500 a year.

However, it's important to remember that a higher deductible means you'll have to pay more out of pocket if you need to make a claim. For example, if you have a $5,000 claim with a $500 deductible, you'll pay the first $500, and the insurer will pay $4,500. But if your deductible is $2,500, you'll pay $2,500, and the insurer will pay $2,500.

Before increasing your deductible, it's essential to ensure you have enough savings to cover a larger deductible and that the potential savings outweigh the increased out-of-pocket cost. Additionally, consider the likelihood of filing a claim, as multiple claims could wipe out any savings.

If you live in a disaster-prone area, your insurance policy may have separate deductibles for specific types of damage, such as windstorm, hail, or earthquake damage. Make sure to review the terms of your policy and consider the risks associated with your location.

Improve home security

Improving your home security is an effective way to lower your house insurance costs. Here are some measures you can take:

Firstly, installing a monitored smoke or burglar alarm system can help you save on insurance. You can get discounts of at least 5% for a smoke detector, and some companies offer bigger discounts of up to 20% for more advanced systems. For example, installing a sophisticated sprinkler system with an actively monitored fire and burglar alarm could result in significant savings.

Secondly, consider adding deadbolt locks to your doors. This simple measure can also help you save on insurance, with some companies offering discounts of around 5% for this security feature.

Thirdly, if you want to go the extra mile, you could install security systems, such as security alarms, storm windows, or a fire sprinkler system. These upfront expenses could pay off in the long run by reducing your insurance premiums.

Additionally, you can improve your home's safety by maintaining your yard and house and keeping your doors locked. These simple measures can make your home more secure and may be considered when assessing your insurance costs.

By implementing these security measures, you can not only make your home safer but also reduce your house insurance costs.

Seek out discounts

There are several ways to seek out discounts on your home insurance. Firstly, you can ask about lesser-known discounts. For example, some insurers offer discounts if no one in your household smokes, if you've recently bought your home, if you pay your premium via automatic bank payments, or if you opt for paperless billing. You may also be eligible for discounts based on your career, with teachers, engineers, and firefighters among those who may be offered cheaper rates.

Secondly, you can build your credit score. In most states, companies can use a credit-based insurance score to determine your rates. A low credit score may result in higher rates, so it's worth taking steps to improve your score, such as making loan payments on time and reducing credit card balances.

Thirdly, you can improve your home's security. Basic security measures such as smoke detectors, burglar alarms, and deadbolt locks can often lead to small discounts. More comprehensive measures, such as installing a sprinkler system and a fire and burglar alarm that are actively monitored, could result in larger discounts.

Finally, you can bundle your home insurance with other types of insurance. Many insurers offer discounts if you buy multiple types of policies from them, such as home and auto insurance. This is known as "building a bundle" and can result in significant savings.

Improve your credit score

Improving your credit score is a great way to lower your house insurance costs. A higher credit score indicates to insurance companies that you are less likely to file a claim, and therefore less of a risk to insure.

• Pay your bills on time: This is one of the most important factors in improving your credit score. Set up a filing system, whether paper or digital, to keep track of your monthly bills, and set due-date alerts so you know when a bill is coming up. You could also automate your bill payments from your bank account.
• Pay down your credit card balances: Aim to keep your overall credit use low. Try to pay your credit card balance in full each month, and stay below your credit limits. If you can't pay your balance in full, keep your total outstanding balance at 30% or less of your total credit limit.
• Keep old accounts open: The age of your credit accounts is a factor in your credit score. If you have old credit accounts that you're not using, don't close them. Closing them will lower your available credit and increase your credit utilisation ratio, which could knock a few points off your score.
• Check your credit report for errors: Credit bureaus aren't perfect, and there may be inaccurate information on your report. You're entitled to a free credit report each year from each of the major bureaus, so check it regularly and dispute any errors.
• Limit hard credit checks: Hard credit checks, which happen when you apply for a new loan or credit card, can damage your credit score. Soft credit checks, which happen when you get an insurance quote, for example, do not affect your score.
• Consider consolidating your debts: If you have a number of outstanding debts, consider taking out a debt consolidation loan to pay them all off. Then you'll have just one payment to deal with, and if you can get a lower interest rate on the loan, you'll be able to pay down your debt faster and improve your credit utilisation ratio.

Review your policy

Reviewing your policy is a great way to lower your house insurance costs. Here are some tips to help you get started:

Understand your current policy

Before making any changes to your insurance, it's essential to understand your current policy inside and out. Start by reviewing the declarations page, which summarises your coverage. Then, check the exclusions page to identify what your policy doesn't cover. By doing this, you can identify areas where you may need more or less coverage.

Review your assets

Over time, the assets you own may change, and it's important to ensure that your insurance policy accurately reflects this. Check what assets are listed on your policy and remove any that you no longer have. You may also want to consider if any of your assets have decreased in value over time, such as jewellery, and adjust their value in your policy accordingly.

Understand your insurance needs

When reviewing your policy, it's crucial to understand your insurance needs. For example, if you've recently sold a backyard trampoline, you can remove the coverage for that. Or, if you've made upgrades to your home, such as installing a monitored burglary or smoke alarm system, you may now be eligible for discounts on your insurance.

Review your coverage limits

It's important to ensure that your coverage limits are appropriate for your needs. For example, if you've made any significant purchases or additions to your home, you'll want to ensure that your policy covers these. On the other hand, if you no longer have certain high-risk items, such as a trampoline or swimming pool, you may be able to lower your coverage limits and save on your premium.

Shop around for a better deal

Don't be afraid to shop around for a better deal on your insurance. Get quotes from multiple insurers and compare them to your current policy. You may find that another insurer can offer you a better rate or more suitable coverage for your needs. By reviewing your policy and shopping around, you can make informed decisions to lower your house insurance costs.

Frequently asked questions