Homeowners insurance is a crucial part of protecting your most valuable asset—your home. It provides financial coverage in case of disasters, theft, or accidents, ensuring that you and your home are secure. However, homeowners insurance can be a significant expense, especially if you don’t take advantage of all the available ways to reduce costs.
In this blog, we’ll explore simple and practical strategies to save money on homeowners insurance while still maintaining the protection you need. Whether you’re a new homeowner or looking to lower your existing policy, these tips will help you reduce your premiums and keep more of your hard-earned cash.
1. Shop Around and Compare Quotes
The first and most important step to saving money on homeowners insurance is to shop around. Insurance rates can vary significantly between companies, so it’s a good idea to compare quotes from multiple providers before choosing one.
How to compare:
- Get multiple quotes: Use online comparison tools or contact several insurance companies directly to get quotes. Make sure you compare similar coverage limits, deductibles, and policy features.
- Review customer service and claim handling: Cheaper doesn’t always mean better. Check the company’s reputation for customer service and how they handle claims before making a decision.
- Ask about discounts: Many insurance companies offer discounts that can lower your premium. Make sure to ask about any potential discounts when getting quotes.
2. Bundle Your Policies
Many insurance companies offer discounts if you buy multiple types of insurance from them. This is called bundling, and it’s one of the easiest ways to save money on homeowners insurance.
For example, if you have car insurance with one company, you can often save by adding your homeowners insurance to the same provider. Bundling typically results in a discount on both policies, sometimes saving you up to 20%.
What to bundle:
- Auto insurance: Combining car and homeowners insurance is the most common type of bundle.
- Life insurance: Some companies offer discounts for bundling life insurance with homeowners insurance.
- Other policies: If you own a boat, motorcycle, or another type of vehicle, bundling these policies with your homeowners insurance can also result in savings.
3. Increase Your Deductible
A deductible is the amount of money you pay out of pocket before your insurance kicks in. For example, if you have a $1,000 deductible and a covered event results in $5,000 worth of damage, you’ll pay the first $1,000, and your insurance company will cover the remaining $4,000.
By increasing your deductible, you can lower your premium. However, it’s important to choose a deductible that you can comfortably afford in case you need to make a claim.
How to decide on a deductible:
- Weigh the savings: Increasing your deductible from $500 to $1,000 could save you around 10% on your annual premium, while raising it to $2,500 could result in even greater savings.
- Be prepared for emergencies: Make sure you have enough savings set aside to cover the higher deductible in case you need to file a claim.
4. Improve Your Home’s Security
Insurance companies often offer discounts if you take steps to make your home more secure. A secure home is less likely to experience theft or damage, which reduces the risk for the insurance company and leads to lower premiums for you.
Ways to improve security:
- Install a security system: Having a monitored alarm system can significantly reduce your homeowners insurance premium. Many companies offer discounts of 5% to 20% for homes with security systems.
- Add smoke detectors and fire alarms: Installing smoke detectors, fire alarms, and carbon monoxide detectors can qualify you for additional discounts.
- Upgrade locks and doors: Reinforcing entry doors with deadbolt locks, upgrading windows, and installing smart locks can reduce the likelihood of break-ins, leading to potential savings.
5. Maintain a Good Credit Score
Many insurance companies use credit scores as part of their assessment when determining homeowners insurance rates. A higher credit score typically leads to lower premiums, as insurers view individuals with good credit as lower risk.
How to improve your credit score:
- Pay bills on time: Late payments can hurt your credit score, so make sure to pay all bills by their due dates.
- Reduce debt: Keeping your credit card balances low and paying off debts can help boost your credit score.
- Monitor your credit report: Regularly check your credit report for errors and take steps to correct any inaccuracies.
6. Review Your Coverage Regularly
Homeowners insurance needs can change over time, so it’s important to review your policy annually to ensure you’re not paying for coverage you no longer need. You may be able to adjust certain aspects of your policy to save money.
What to review:
- Reassess the value of your home and belongings: If the value of your home has decreased or you’ve sold valuable items, you may be able to lower your coverage limits.
- Drop unnecessary coverage: If you’re no longer at risk for certain events (for example, if you’ve moved away from an area prone to flooding), you can eliminate unnecessary riders or endorsements from your policy.
- Update your insurer on home improvements: If you’ve made upgrades that reduce risk, such as installing a new roof or replacing old plumbing, let your insurer know. These updates can qualify you for lower premiums.
7. Consider a Loyalty Discount
If you’ve been with the same insurance provider for several years, ask about loyalty discounts. Some companies offer lower premiums to long-term customers as a reward for sticking with them.
However, don’t assume that loyalty discounts automatically make your policy the best deal. It’s still important to shop around and compare prices to ensure you’re getting the best value for your money.
Loyalty savings tips:
- Ask about discounts for staying: After five years with the same provider, ask if you qualify for a loyalty discount.
- Balance loyalty with competition: While it’s great to benefit from a loyalty discount, you should still compare rates from other companies periodically to make sure you’re not missing out on better deals elsewhere.
8. Avoid Small Claims
Filing frequent small claims can lead to higher premiums or even make it harder to renew your policy. Instead of filing a claim for minor damage or repairs, consider paying for these out of pocket.
By saving your insurance for larger claims, you reduce the risk of seeing a premium increase. Additionally, some insurance companies offer discounts for policyholders who remain claim-free for a certain number of years.
When to avoid claims:
- For minor repairs: If the cost to repair damage is close to or below your deductible, it’s often better to pay out of pocket.
- For preventative maintenance: Keeping up with regular home maintenance can help you avoid small problems that could turn into bigger, more expensive issues later.
9. Take Advantage of Discounts
Many insurance companies offer a variety of discounts that can help lower your homeowners insurance premium. In addition to the savings mentioned above, you may qualify for other discounts, such as:
- New home discount: If your home is newly built, you may qualify for a discount.
- No-claims discount: Policyholders who go a certain number of years without filing a claim often receive a discount.
- Retiree discount: Some companies offer discounts for retirees who spend more time at home, reducing the risk of theft or damage.
Conclusion
Homeowners insurance is a vital part of protecting your home and financial future, but that doesn’t mean you have to overpay for it. By shopping around, increasing your deductible, improving your home’s security, and taking advantage of discounts, you can significantly reduce your homeowners insurance costs.
Regularly reviewing your policy and maintaining a good credit score will also help ensure that you’re getting the best possible deal. With these simple strategies, you can save money on homeowners insurance without sacrificing the protection you need.
