Cutting House Insurance Costs

There are several ways to save on house insurance. Firstly, it is important to understand the factors that influence your premium, such as your credit history, the state of your home, and the coverage limits in your policy. Reviewing your policy to ensure that the coverage limits accurately reflect the rebuild cost of your house and the replacement value of your belongings can help lower your premium. Improving your credit score and making home improvements, such as installing security systems or upgrading old features, can also reduce your rates. Additionally, consider shopping around for insurance quotes from different companies and taking advantage of discounts offered by insurers, such as bundling home and auto insurance or having a good claims history.

Raise your deductible

Raising your deductible is a surefire way to save money on your homeowners insurance premium. A deductible is the amount you pay towards a loss before your insurance company starts paying a claim. The higher your deductible, the more money you can save on your premium.

Most insurance companies recommend a deductible of at least $500. Increasing your deductible to $1,000 can save you up to 25% on your premium. For example, if you have a $1,000 deductible, you could save an average of nearly 13% a year by increasing it to $2,500. This equates to an average saving of $500 a year. In some states, the savings can be even higher. For instance, Floridians might see savings of around $565 a year by increasing their deductible from $500 to $2,500.

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. Therefore, it's crucial to ensure you have enough money set aside to cover the higher deductible. You should also consider the likelihood of needing to make a claim. On average, homeowners file a claim once every 10 years. So, if you increase your deductible, you could save money over time, as long as you don't have to make multiple claims.

Additionally, it's worth noting that insurance companies may increase your rates after you file a claim. If you file more than one or two claims in a 10-year period, your premiums are likely to increase significantly. In some cases, the insurance company may even decide not to renew your policy. Therefore, it's often advisable to pay for minor damage out of pocket, rather than filing a claim, especially if the claim amount is only slightly higher than your deductible.

When deciding whether to raise your deductible, it's important to weigh the potential savings against the risk of having to pay a higher amount out of pocket in the event of a claim. Crunch the numbers to see how much you could save annually and ensure you have enough savings to cover the higher deductible if needed.

Improve home security

Improving your home security is a great way to save on house insurance. Here are some ways to do that:

Install a security system

Monitored security systems can help deter potential intruders and alert you and your neighbours of an intrusion. Some insurance companies may offer discounts for installing security cameras and other devices. Security systems can also help protect your home from fires and water damage. For example, a monitored smoke detector can alert you of a fire when you're away, and water sensors can help detect leaks.

Install smoke detectors, fire alarms, and sprinkler systems

Having smoke detectors, fire alarms, and sprinkler systems in your home can help you save on insurance. Some insurance companies offer discounts or credits for having these safety features installed.

Deadbolt locks

Deadbolt locks are a basic security feature that can help you save on insurance.

Remove unused structures

Old sheds or other unused structures on your property can affect your dwelling coverage limits and increase your insurance rates. Removing these structures may result in lower insurance rates.

Choose the right location

The location of your home can impact your insurance rates. For example, if you live in an area prone to natural disasters, your rates may be higher. Consider the natural disaster risks in your area when choosing a location for your home.

Maintain your home

Keeping your home well-maintained can help lower your insurance rates. This includes regularly maintaining your roof, heating, plumbing, and electrical systems. Older homes can also be retrofitted to make them more resistant to natural disasters.

By implementing these security measures and choosing the right location for your home, you can improve your home security and save on house insurance.

Seek out other discounts

When seeking out other discounts, it's important to remember that insurance companies don't all offer the same discounts or the same amount of discount in all states. For example, retired people may be eligible for a discount of up to 10% as they are at home more often, giving them an opportunity to spot fires and burglaries sooner, and they also have more time to maintain their homes. If you're at least 55 years old and retired, be sure to ask about this discount.

Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere, so it's worth checking with your employer to see if they have any recommendations.

If you don't smoke, you may be eligible for a discount. Similarly, if you've recently purchased your home, pay your premium via automatic bank payments, or opt for paperless billing, you may be able to get a discount. Some insurance companies also offer discounts for specific careers, such as teaching, engineering, or firefighting.

If you're a student, veteran, or have a good academic record, you may be eligible for a discount. Sometimes, discounts are also available if you pay the annual premium in full.

Review your credit history

Reviewing your credit history is an important step in saving on house insurance. Your credit history can have a significant influence on your home insurance premium. In most states, insurance companies can use a credit-based insurance score to determine your rates. This score is calculated differently for each insurer, but it generally predicts the likelihood of an individual filing insurance claims.

To save on house insurance, it is advisable to maintain a good credit history and improve your credit score. Paying your bills on time, keeping credit card balances low, and regularly checking your credit report for errors are some ways to achieve this. By establishing a solid credit history, you can reduce your insurance costs.

Additionally, it is worth noting that insurance companies in certain states, such as California, Maryland, and Massachusetts, do not use credit scores to set homeowners insurance premiums. If you reside in one of these states, your credit score will not impact your insurance costs.

When reviewing your credit history, pay attention to the following factors that can positively or negatively affect your credit-based insurance score:

• Bank and credit accounts in good standing.
• Bank or credit accounts in collection.
• Numerous past-due accounts.
• High use of available credit.
• Numerous recent applications for credit.
• Previous credit performance, including timely bill payments.
• Amount and types of outstanding debt.

By proactively managing your credit history and taking steps to improve your credit score, you can save significantly on your house insurance premiums.

Shop around and compare policies

Shopping around and comparing home insurance policies is a great way to save money. Here are some tips to help you get the best deal:

• Understand your home's needs: Before you start shopping around, it's important to understand the specific needs of your home. This includes considering the age and condition of your home, the value of your belongings, and any potential risks such as flood or fire damage. By understanding these factors, you can better assess which policies offer the coverage you need at a price that fits your budget.
• Compare multiple providers: There are many home insurance providers in the market, and they all offer different rates and coverage options. Take the time to research and compare multiple providers to find the best fit for your needs. Online comparison tools can be a great way to quickly get quotes from multiple insurers.
• Consider policy offerings and claims satisfaction: When comparing policies, look beyond just the price. Consider the coverage limits, exclusions, and add-ons offered by each provider. Additionally, research their claims satisfaction ratings to gauge how easy it will be to file a claim if needed. Resources like the J.D. Power satisfaction survey and the National Association of Insurance Commissioners (NAIC) Complaint Index can provide valuable insights.
• Look for discounts: Many home insurance companies offer a range of discounts that can help lower your premium. For example, bundling your home and auto insurance policies together, or being a homeowner over the age of 55, may qualify you for a discount. Review the discounts offered by different insurers and see if you meet their criteria.
• Review your policy regularly: Home insurance rates and coverage options can change over time, so it's important to review your policy periodically. When your policy is up for renewal, take the time to compare it with other providers to ensure you're still getting the best deal. Shopping around can help you identify potential savings or additional coverage options that better meet your needs.

Frequently asked questions