In this article:
Paying for homeowners insurance can be a tough pill to swallow. Since you're buying something you hope never to use, why pay more for it than you have to? Fortunately, there are ways to get the coverage you want at the price you need. Insurance companies consider a variety of factors when setting your home insurance premiums. Some factors, such as your home's age and location, are beyond your control, but others are up to you. Take charge and review these nine steps to start saving on your homeowners insurance.
1. Raise Your Deductible
Whenever you file an insurance claim, you'll have to pay a certain amount out of pocket before your insurance coverage kicks in. This is called the deductible, and homeowners policies generally have a minimum deductible of $500 or $1,000. Increasing your deductible can lower your premiums, but you should only do so if you have enough savings to handle the higher deductible if necessary.
2. File Claims Judiciously
When setting your premium rates, home insurance companies review all the insurance claims filed on your home in the past seven years. If you've made a lot of claims, they'll consider you more likely to file claims in the future—and may increase your rates accordingly. Before filing a claim, carefully consider the cost of the loss or repair, as well as your deductible. For instance, if you file a claim for $1,500 worth of repairs to your roof when you have a $1,000 deductible, insurance will cover only $500, and you'll have a claim on your record. In the long run, paying for the repairs yourself instead of filing a claim could keep your premiums down.
3. Play It Safe
Some insurance companies reduce your premiums if you take steps to reduce your risk, such as installing an alarm system, deadbolt locks or other devices that help protect against burglaries. You might get a discount for having smoke detectors or a fire alarm; living in a guard-gated community; or installing storm shutters if you live in a hurricane zone. Updating your older home with modern electrical, heating and plumbing systems can also help. Before investing in such upgrades, check with insurance companies to see which discounts they offer.
4. Address Risks to Kids
Home features that could put children in danger, such as trampolines, swimming pools, treehouses or water features, are called "attractive nuisances" because they pose a risk to children on your property. If children are injured, you could be held liable, even if they were trespassing. Removing the nuisance or barricading it from children by erecting gates or fencing can help reduce your homeowners insurance premiums.
5. Bundle Your Insurance Policies
You may be able to secure a discount if you buy more than one policy through the same insurance company, such as homeowners insurance and auto insurance. This is known as "bundling" and can mean significant savings—plus the convenience of having your policies in one place. When looking for homeowners insurance, start with your car insurance company and see what kinds of discounts they can offer.
6. Investigate Other Discounts
Do a little sleuthing, and you'll discover dozens of ways to save on your homeowners insurance premiums. For example, you might qualify for reduced rates through membership organizations, professional or business associations, alumni groups, your employer or other affiliations. Some insurance companies offer discounts for retirees, loyalty discounts for sticking with the same insurer, or discounts if you go a certain number of years without filing a claim.
7. Modify your coverage
Homeowners insurance includes structure insurance, liability insurance, personal property insurance for the home's contents, and additional living expenses coverage that can pay for you to live elsewhere if your home becomes uninhabitable. You can select different levels and dollar amounts for each type of coverage. Coverage that pays more in the event of a claim will have higher premiums. For instance, personal property insurance that covers only the current value of damaged possessions costs less than coverage to replace them with brand-new items.
8. Improve Your Credit
In most states, insurance companies can check your credit before issuing a homeowners insurance policy. They may use your credit-based insurance score, which is a special credit score used by insurance companies to assess your risk of filing a claim. If you have poor credit, you can probably still get homeowners insurance, but it might cost more than if you had good credit.
Although your credit-based insurance score is different from the credit score lenders use, it's based on many of the same factors, such as your payment history, your overall credit utilization and whether you have any defaults or collections on your credit report. Credit-based insurance scores aren't available for consumers to view, but checking your credit score will give you a good idea of whether your credit-based insurance score needs improvement. If so, you may want to work on paying down debts, bringing accounts current, making all your payments on time and avoiding new credit applications.
9. Compare Prices
There are dozens of companies that sell homeowners insurance, ranging from traditional insurance firms to online-only companies. Checking out all the options can earn you substantial savings. Start by talking to an insurance agent to determine what kind of coverage you need. Then get quotes from a variety of insurance providers, being sure to compare the same type of insurance and amount of coverage.
Cost is a factor when buying homeowners insurance, but you shouldn't skimp on service and reliability. Be sure to check into the company's financial stability using sources such as A.M. Best and S&P. Read online reviews and ratings to see how good the company's customer service is. If disaster strikes your home, having a helpful, responsive insurance agent on your side can make all the difference in getting through a difficult time.