Homeowners insurance premiums can be expensive—there’s no denying it. But your coverage also plays a vital role in protecting you and your home from serious losses that can happen when unexpected disasters strike or accidents occur on your property. So how do you balance adequate coverage with affordability?
Especially during turbulent times—when the economy or your job feels shaky—it’s important to cut costs wherever possible. One way to do that is to make sure you’re getting the best deal available on your homeowners (and auto) insurance and taking advantage of all available discounts you qualify for.
We’ve compiled a list of several effective ways to lower your insurance costs and reduce your premiums. We encourage you to spend some time digging in and exploring your options. As always, we’d be happy to jump in and help any way we can to ensure you’re taking advantage of all of the savings available to you while also getting the protection you need.
How is my homeowners insurance premium determined?
Many factors play into the cost of your homeowners insurance policy, including your location, the cost to rebuild your home, your claims history, credit score, the age of your home, the materials that make up your home, and the amount of your deductible. Adjusting some of these variables (the ones you can control) can help lower your insurance costs.
Tips for Lowering Your Insurance Premiums
1. Ask About Discounts
Ask your insurance company if they offer any discounts that you could be taking advantage of. Here are common scenarios that may qualify you for discounts through your insurance carrier.
- You’re retired.
- You have smoke detectors, dead-bolt locks, an alarm system, and/or a sprinkler system installed in your home.
- You’re a new construction owner (this one can be huge!).
- You bundle your home and auto policies.
- You haven’t filed a claim in years.
- You’re a long-time customer.
- You’ve remodeled your home.
- Your home was built using fire-resistant materials.
- Your membership in an organization qualifies you for a special discount.
- You pay online (paperless) rather than through the mail.
2. Bundle Home and Auto
Bundling more than one type of insurance—such as home and auto—by buying multiple policies from a single carrier can earn you a discount. Not only will it be easier on you to work with a single company for multiple lines of insurance, but you could shave 5–15% off your premium.
3. Join an Affinity Group
Some insurance companies sell home and auto insurance through affinity groups, which commonly include colleges, alumni associations, business groups, military organizations, educational organizations, honor societies, and certain clubs. Members of these groups who’ve partnered with specific insurance companies are eligible for exclusive savings that aren’t available to the general public.
4. Watch Your Credit Score
Insurance companies use what they call your insurance score, in addition to several other factors, to determine your insurance premium. Your insurance score is calculated by examining your claims history and overall credit rating. Here are some ways to increase your insurance score over time:
- Keep your home safe, secure and well maintained.
- Make sure all your open credit accounts remain in good standing.
- Increase your credit score by paying all bills on time, keeping your credit balance low, and lowering the use of your total available credit.
You should also keep a close eye on your credit score so you’re aware of any changes that occur. If an error arises at any time, you should have it quickly corrected so it doesn’t negatively affect your insurance score.
5. Shop Around
Do some research to see if you can find more affordable insurance that offers the same coverage you already have. Get quotes from various insurance companies and compare them. The differences you find may surprise you. Always remember to weigh cost with quality service, and never sacrifice one for the other. Your home is (most likely) your biggest asset and requires adequate protection.
Look closely at each policy you’re researching to ensure coverage selections, deductibles, and limits align. In other words, compare apples to apples. You can use online tools to request quotes, read consumer guides, and research different companies to see which ones have the best ratings and why. A.M. Best is a great tool to research ratings and see how financially secure different insurance carriers are. You can also request quotes from different types of insurance agents, including independent agents, direct writers, and captive agents.
6. Pay Annually Rather Than Monthly
Paying your entire annual insurance premium up front can save you money throughout the year. Insurance companies often offer lower rates if you pay your premium in one lump sum versus dividing your premium up into monthly payments.
7. Review Your Policy Yearly
Things change. You may have renovated part of your home over the past year or gotten rid of something that your policy is covering. Maybe you’ve made some new purchases that you need additional coverage for. It’s important to review your policy at least once a year so it remains current and you’re not paying for unnecessary expenses.
8. Increase Home Safety and Security
If you have smoke and carbon monoxide detectors everywhere they’re recommended in your home, a security system, or dead-bolt locks, you might qualify for a 5% discount. If you have a sprinkler system in your home and an alarm system for theft or fire that alerts the authorities when it sounds, you could qualify for a 15–20% discount. Even making your home more storm and disaster resistant or updating old electrical or plumbing systems can potentially cut down your insurance costs.
9. Raise Your Deductible
Your deductible is the amount of money you need to pay for a loss when you file a claim with your insurance company. After you pay your deductible, your insurance company will pay for the remainder of the loss up to the limits of your policy. By raising your deductible (agreeing to pay more out-of-pocket if you file a claim), you can save money on your premiums. According to the Insurance Information Institute, you could save as much as 25% on your insurance premiums if you raise your deductible from $500 to $1000!
10. Partner with an Independent Agent
Independent insurance agents are trained and authorized to sell insurance for several different carriers. They can shop around for you to help you find the best deals and offer recommendations based on your needs and budget. If you decide to work with one of the carriers they suggest, the agent will then work as an intermediary between you and that company. They can file claims for you, give you several different quotes fast, offer unbiased advice, and speak with carriers on your behalf.
Many of the more general tips we listed can also be applied to other types of insurance, such as auto, business, and life. If you need help figuring out how to lower your insurance premiums, you can contact us any time. We’d be happy to answer any of your questions or shop around for cheaper coverage options so you can start saving ASAP.
[1, 2] “Twelve Ways to Lower Your Homeowners Insurance Costs.” Insurance Information Institute.