In this economy, we’re all looking for ways to save money. In evaluating our budgets, there are some required expenses we might question, like home insurance. Do you have to buy it? Can you even reduce the cost of your homeowners insurance? Homeowners insurance is definitely a must-have, and yes, there are ways to save on it.
First, your lender will require you to have homeowners insurance if your home is not yet paid off. If you choose not to insure your home, your lender may do one of two things. They may force you into a lender-placed policy, which will cost you quite a bit more than if you were to take out a plan as part of your home purchase. Or worse, they may send you into default on your loan, which will negatively impact your credit and can cause you to lose your home. If your home is paid off, it’s still important to insure your home to help cover the costs of rebuilding in the event a devastating fire or natural disaster destroys it.
The bottom line, if you own a home, you must have homeowners insurance. So how do you reduce your premiums and maintain the coverage you need? Here are some tips to help reduce your homeowners insurance premiums.
1. Bundle up
Take advantage of the fact that many insurance companies compete for your business. To earn it, they will give you a customer discount when you put all your eggs in their basket. If you’ve got a vehicle and own a home, you can save 10–20% on insurance when you bundle your coverage. There are online resources to help simplify how you shop for coverage. The Zebra offers a comprehensive online tool that can help you shop for and compare insurance package options. Consumers can bundle up car, home, and even life insurance to save the most money.
2. Raise your deductible
It seems funny to suggest that you pay more to save more, but the reality is, if you raise your deductible on your homeowners insurance you can save more money. According to the Insurance Information Institute, the higher your deductible, the more money you can save on your premiums. So, if you raise your deductible from, say, $500 to $1,000, you can save up to 25% on your insurance payments. Remember, your deductible is what you’ll pay when you experience damage or loss to your home. If you live in a storm-prone area where hurricanes or earthquakes are a common threat, it is important to evaluate your policy, as you could have more than one deductible.
3. Secure your safe place
Your home is your haven, and when you improve its security and safety systems, you can save money. Home insurers offer discounts to homeowners when they do things like install burglar alarms or interior sprinkler systems in case of fire. By installing a system that can notify law enforcement of a breach of your home’s security, your insurer could reward you by reducing your insurance premium by 10% or more.
4. Insure for replacement cost
If you experience an event like a home fire or a natural disaster, those tragic events don’t take the land your home sits upon, like they can take your roof. So, make sure you’re only insuring your home to cover the replacement costs of your home structure and contents. Don’t include in that value the land your home was built on. This will help reduce what you’re covering and your premium.
5. Maintain good credit
In almost all financial scenarios, good credit is rewarded, and homeowners insurance is no exception. Insurers use your credit information to inform the cost of your policy; with good credit, your price can go down. To keep good credit, pay your bills on time and be smart about how many balances you carry. Credit Karma offers free credit reports and an app to help you constantly monitor your credit scores. As you make progress on improving your score, let your insurance agent know so they can consider making adjustments to your policies that can help save you money.
6. Stick with your insurer
Find an insurance company and agent you like and stick with them. One of the best ways to help reduce the cost of your homeowners insurance and other types of insurance is to maintain a lasting relationship with your agent. Many insurance companies offer discounts to long-term policyholders. Even after being a customer for just three years, you might notice a small discount of 5%, and over time, your discounts will likely increase, decreasing your premiums by 10–25%.
Homeowners insurance is a necessary expense, but there are ways to reduce the cost. By bundling it up with your other coverages, you can start saving money right away. Then, consider the other tips above to chip away at your monthly premium. Contact your agent and find out what discounts you may already be missing out on. Within no time, you could be saving 10–30% a month on your homeowners insurance.
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