Buying a home is a significant investment, so homeowners insurance is necessary. However, the price of homeowners insurance varies from person to person. Each policy cost is based on characteristics of the home and the owner, combined with insurance requirements.
Policies can be costly for many homeowners. However, there are specific steps that can be taken to reduce the cost of home insurance. These steps can be grouped into four different categories:
- Shopping Strategies
- Policy Adjustment
- Home Improvements
- Other Strategies
Here we’ll cover the core tips for saving on homeowners insurance, one category at a time.
Homeowners Insurance Shopping Strategies
These steps can all be taken during the process of searching for an insurance provider and a specific plan.
- Home Valuation: The cost of purchasing a home is not the same as the rebuilding cost. Home insurance policies should be sufficient to cover the cost of fully rebuilding a home. Whereas the purchase price of a home includes the value of the land the house sits on, insurance is not necessary for the land itself.
- Don’t Overbuy: Before you get a home insurance policy, it’s best to know how much insurance is necessary. Most agents can fairly assess the value of the necessary policy. Still, it’s wise to know how much insurance is needed to cover the home and the items within adequately.
Homeowners Insurance Policy Adjustments
Existing insurance policies may have some “wiggle room.” Digging into what insurance providers offer and seeking out discounts through small changes may reduce the cost of the policy overall.
- Increased Deductible: Deductibles are the maximum amount of money you can pay out of pocket before the insurance covers the remaining costs. With most home insurance plans, a higher deductible leads to a lower monthly premium.
- Ask About Discounts: Home insurance discounts are not always advertised. Ask about potential discounts that might apply to your situation. Some discounts are available in specific states or counties, while others may be nationwide promotions or benefits. Examples of common discounts include senior citizen discounts and first responder discounts.
- Discuss Loyalty Benefits: Staying with the same home insurance provider for years without making a claim may lead to loyalty benefits. Owning a policy for years with no claims on record indicates that a person is a low-risk client.
- Review Home Item Valuations: Sometimes, items of significant value are included in home insurance plans. If a burglary or fire were to occur, those items could be covered by the policy. In these cases, policies may cost more to account for the increased value of the policy itself. However, valuable items often lose value over time. When valuable items are included on a home insurance policy, it’s best to reassess their value annually to ensure the cost of the policy matches the actual value of the items.
Certain improvements made to the insured home may help to reduce the cost of the insurance policy. These improvements center around reducing the risk of costly damage to the home or the items within it.
- Build Up Disaster Resistance: Homes that are in any risk of damage from natural disasters or storms are often eligible for discounts if the homeowner installs the right equipment or structural improvements to make the home more resistant to damage. Examples of disaster resistance measures include installing storm shutters or shatterproof glass.
- Security Upgrades: Home security systems often allow homeowners to get a better rate on insurance policies. Anything that keeps the home, valuables, and family safer is likely to result in a discount. Burglar alarms, fire alarms, sprinkler systems, and other security measures could all make a difference. Insurance companies often make recommendations for specific security systems, laying out the types of systems for which they would be willing to provide discounts on insurance premiums.
- Home Repairs: Any time claims are made against insurance policies to pay for home repairs, premiums are at risk of increasing. To keep premiums low, homeowners are recommended to handle repairs themselves whenever possible. Doing home repairs without insurance intervention may help reduce premiums over time.
Other Strategies to Save Money
Other money-saving tips that may help reduce the cost of homeowners insurance include:
- Credit Score Monitoring: Insurance providers are increasingly using credit scores as a measure of risk for policyholders. Low credit scores could result in higher premiums, while higher credit scores could result in lower premiums.
- Consider Home Insurance from the Start: Home insurance premiums are not entirely predictable. However, homebuyers may be able to avoid higher premiums by looking for specific risk factors associated with houses or neighborhoods. Factors like flood risk and crime rates tend to impact home insurance premiums. Buying a home in a low-risk area may lead to lower monthly payments.
Saving money on homeowners insurance can reduce household or investment expenses significantly. These tips may be useful in finding a lower rate.
Home Insurance Resources
How to Save Money on Your Homeowners Insurance (Insurance Information Institute)
Twelve Ways to Lower Your Homeowners Insurance Costs (Insurance Information Institute)
How to Save Money on Homeowners Insurance (ValuePenguin)
How to Save Money on Homeowners Insurance (Millionacres)