The price you pay for your homeowner’s insurance can vary by hundreds of dollars depending on several factors, including the company you buy your policy from.
Here are twelve steps you can take to help you save money on your homeowners insurance:
1. Shop Around
It’ll take some time, but could save you a good sum of money. Ask your friends, check the Yellow Pages or call your state insurance department. You can also access insurance information for your state on the Internet at the Insurance Council of Australia. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.
Also check consumer guides, insurance agents, companies and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don’t consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. So talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs.
Check the financial ratings of the companies with AM Best or Standard and Poor’s.
2. Raise Your Deductible
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 per cent.
Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the coast in the East, you may have a separate windstorm deductible, if you live in a state vulnerable to hail storms, you may have a separate deductible for hail, and if you live in an earthquake-prone area, your earthquake policy has a deductible.
3. Buy Your Home and Auto Policies From The Same Insurer
Some companies that sell homeowners, auto and liability coverage will take 5 to 15 per cent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.
4. Make Your Home More Disaster Resistant
Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes.
In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
5. Don’t Confuse What You Paid For Your House With Rebuilding Costs
The land under your house isn’t at risk from theft, windstorm, fire and the other perils covered in your homeowner’s policy. So don’t include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.
6. Improve Your Home Security
You can usually get discounts of at least 5 per cent for a smoke detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 per cent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren’t cheap and not every system qualifies for a discount.
Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you’d save on premiums.
7. Maintain a Good Credit Score:
Insurance companies often use credit scores as a factor in determining premiums. A good credit score indicates financial responsibility and stability, which insurers perceive as lower risk. Consequently, policyholders with higher credit scores tend to receive lower insurance premiums.
To maintain a good credit score, it’s essential to pay bills on time, keep credit card balances low, and avoid opening multiple new accounts within a short period. Regularly monitoring your credit report for errors and disputing any inaccuracies can also help ensure an accurate reflection of your creditworthiness.
Improving your credit score may take time, but the potential savings on homeowners insurance premiums can make it worthwhile. By demonstrating responsible financial habits, you not only save money on insurance but also have access to better rates on other financial products.
8. Update Your Home
Investing in home improvements can not only enhance your living space but also lead to savings on homeowners insurance premiums. Insurance companies often offer discounts for features that make homes safer and more resilient to disasters.
For instance, installing modern fire detection and suppression systems, such as smoke detectors and sprinkler systems, can reduce the risk of fire damage and qualify you for lower premiums. Similarly, reinforcing your roof to withstand strong winds or upgrading your plumbing and electrical systems can mitigate the risk of costly claims, resulting in potential insurance savings.
Additionally, making your home more energy-efficient with upgrades like insulated windows, doors, and HVAC systems not only reduces utility bills but also demonstrates a commitment to maintaining your property, which insurers view favourably.
Before undertaking any home improvement projects, it’s advisable to consult with your insurance provider to determine which upgrades may qualify for discounts and ensure that any renovations comply with local building codes and insurance requirements.
9. Review Your Coverage Annually
As your home and circumstances change over time, it’s crucial to review your homeowner’s insurance coverage annually to ensure it adequately protects your property and assets. Failing to update your coverage could leave you underinsured in the event of a disaster or overpaying for coverage you no longer need.
Factors such as home renovations, additions, or improvements can increase the replacement cost of your home, necessitating adjustments to your coverage limits. Likewise, acquiring high-value possessions like jewellery, artwork, or electronics may require additional coverage through endorsements or riders to ensure they’re adequately protected.
Conversely, if you’ve paid off your mortgage or downsized your living space, you may be eligible for lower coverage limits and reduced premiums. Reviewing your policy annually allows you to tailor your coverage to your current needs, potentially saving money while maintaining adequate protection for your home and belongings.
10. Consider a Higher Deductible
Your deductible is the amount you’re responsible for paying out of pocket before your insurance coverage kicks in. Choosing a higher deductible can lower your homeowner’s insurance premiums, as you’re assuming more financial risk in the event of a claim.
Before opting for a higher deductible, it’s essential to assess your financial situation and determine how much you can comfortably afford to pay in the event of a loss. While a higher deductible can lead to savings on premiums over time, it also means you’ll need to have sufficient savings set aside to cover the deductible if you need to file a claim.
When considering a higher deductible, weigh the potential savings against the increased financial responsibility and ensure that you’re comfortable with the trade-off. Additionally, discuss your options with your insurance provider to understand how adjusting your deductible will affect your premiums and coverage.
11. Maintain a Good Claims History
Insurance companies consider your claims history when determining your homeowners insurance premiums. Policyholders with a history of few or no claims are perceived as lower risk and may qualify for lower premiums as a result.
To maintain a good claims history, it’s essential to exercise caution and prudence when filing insurance claims. While it’s important to report legitimate claims promptly, filing multiple claims for minor losses or damages can signal higher risk to insurers and result in higher premiums.
Additionally, taking proactive measures to prevent losses, such as installing security systems, maintaining your property, and implementing safety precautions, can help minimize the likelihood of filing insurance claims. By demonstrating a commitment to protecting your home and assets, you not only reduce the risk of losses but also potentially qualify for lower insurance premiums based on your claims history.
In conclusion, by maintaining a good credit score, updating your home with safety improvements, reviewing your coverage annually, considering a higher deductible, and maintaining a good claims history, you can effectively save money on your homeowners insurance premiums while ensuring adequate protection for your most valuable assets.
12. Review Your Policy for Discounts:
When it comes to homeowners insurance, there are often numerous discounts available that policyholders may not be aware of. Reviewing your policy for potential discounts can result in significant savings on your premiums.
Insurance companies offer discounts for various factors, including the age and construction of your home, your claims history, and safety features installed in your property. For example, if you live in a newer home or have recently renovated your property, you may be eligible for discounts based on its improved condition.
Furthermore, certain lifestyle factors can also qualify you for discounts. Non-smokers, for instance, may receive lower premiums due to the reduced risk of fire-related incidents. Similarly, being a member of certain professional organizations or alumni associations may entitle you to group discounts.
To ensure you’re maximizing your savings, it’s essential to discuss potential discounts with your insurance agent or broker. They can help identify which discounts you qualify for and provide guidance on how to obtain them. Additionally, regularly reviewing your policy allows you to stay informed about new discounts or changes in eligibility criteria that may impact your premiums.