Don’t skimp—but do shop around
Having homeowners insurance is undoubtedly an expense—but it is also your protection against potential disaster and financial ruin. Homeowners policy prices vary from company to company, so do some comparison shopping and get the best deal you can.
- Ask friends and relatives for recommendations for insurers and then do your due diligence.
- Contact the state insurance department to find out whether they make available consumer complaint ratios by company. If they do, check into the insurers you’re considering doing business with.
- Check the financial health of prospective insurance companies by using ratings from independent rating agencies and consulting consumer magazines for reviews.
- For price quotes, call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers.
- Get quotes from at least three companies.
- Don’t shop price alone. Remember, you’ll be dealing with this company in the event of an accident or other emergency. When you need to file a claim you’ll want an insurer that provides good customer service, so test that while you’re shopping, and choose a company whose representatives take the time to address your questions and concerns.
Raise your deductible
A deductible is the amount of money that you are responsible for paying toward an insured loss. The higher your deductible, the more money you can save on your premium, so if you can pay above the minimum $500 or $1,000 deductible, for example, you may reduce the cost of your homeowners policy.
If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters, so be sure you take this into account when considering whether to raise your standard homeowners deductible.
Buy your home and auto policies from the same insurer
Many companies that sell homeowners insurance also sell auto insurance and umbrella liability policies. If you buy two or more insurance policies from the same provider, you may be able to reduce your premium. To be sure you’re getting the best price, make certain any combined price from one insurer is lower than buying the coverages separately from different companies.
Make your home more disaster resistant
If you live in a disaster prone area, you will have more insurance options to choose from if you take certain preparedness steps— for example, installing storm shutters and shatterproof glass or reinforcing your roof. Older homes can be retrofitted to make them better able to withstand earthquakes. Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. These precautions may prevent excessive damage and the related work and stress involved in rebuilding.
Do not confuse what you paid for your house with rebuilding costs
Your homeowners policy is based on the cost to rebuild your home, not its real estate value. While your house may be at risk from theft, windstorm, fire and the other perils, the land it sits on is not, so don’t include its value in deciding how much homeowners insurance to buy. If you do, you’ll pay a higher premium than you should.
Ask about discounts for home security devices
Most insurers provide discounts for security devices such as smoke detectors, burglar and fire alarm systems or dead-bolt locks. As some of these measures aren’t cheap and not every system qualifies for a discount, consult your insurance professional for recommendations.
Seek out other discounts
Types and levels of discounts vary from company to company and state to state. Ask your insurance professional about discounts that are available to you—for example, if you’re 55 years old and retired, or you modernize your plumbing or electrical systems, you may be qualify for a price break.
Look into group coverage
Does your employer administer a group insurance program? Check to see if a homeowners policy is available. In addition, professional, alumni and business groups may offer an insurance package at a reduced price. Whatever the offer, do your homework to make sure it is a better deal than you can find elsewhere.
Stay with the same insurer
If you’ve been insured with the same company for a number of years, you may receive a discount for being a long-term policyholder. But to ensure you are getting a good deal, periodically shop around to compare your premium with the prices of policies from other insurers.
Review the value of your possessions and your policy limits annually
Review your home inventory and any upgrades to your house or condo. Make sure your homeowners or renters policy covers any major purchases or additions to your home and also check that you’re not spending money for coverage you don’t need. For example, if your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater and pocket the difference.
Another great way to save money on your homeowners policy is to take into account the cost of insurance while you’re shopping for a house and before you buy. These home buyers’ insurance guidelines provide tips on the locations, types of construction and other factors that will help keep down the cost of your coverage.
- Shop around and compare prices. This is the simplest way to save on your rates. Ask about promotions.
- Ask about discounts and bundle your policies. If you own a car, get a home insurance quote from your car insurance provider. Companies often offer discounts when you “bundle” your home and car insurance together.
- Increase your deductible on your policy. The deductible is the part of the loss you must pay when you make a claim. When the deductible goes up, the premium goes down. Make sure you can afford to pay the deductible in the event of a loss.
- Protect your home against fire, theft, water and severe weather damage. Installing loss prevention devices such as a burglar alarm system, reinforced roofing, a sewer backwater valve, storm shutters, sump pumps and sprinkler systems can potentially provide additional protection and reduce your premiums. Upgrading electrical, heating and plumbing systems may help to reduce your premium. Contact your insurer when updating your home’s protective systems – you may be eligible for a discount.
- Ask your current insurance representative about additional discounts. If you’re 55+ or are mortgage or claims-free you may be eligible to save money on your home insurance.
- Consider paying your premium annually. You can save money by avoiding potential service or interest charges by paying your premium in installments.
- Evaluate your coverage every year. Ensure your policy reflects your home’s current value, including upgrades, recent renovations and major purchases.
- As a non-smoker, you have a lower risk of fire loss and may be offered a discount.
- Avoid over-insuring your home. Don’t include the market price of underlying land. Insure your home for what it would cost to rebuild with like-quality materials in the event of a loss. Speak to your insurance representative about this.
- When shopping around, wait until renewal to change your insurance company. Avoid a potential mid-term cancellation penalty if you decide to change your home insurance company.