Hello, smart homeowners! Hey there, it’s your favorite top blog writer! Today we’re going to talk about something that every homeowner cares about: their home insurance premium. We all want to find ways to lower the cost of home insurance, but we’re often afraid of losing important coverage. What if I told you that you could eat your cake and have it too? That you can get cheap home insurance without giving up the peace of mind that comes with a strong policy?
In this ultimate guide, we’ll look at a lot of useful ways to help you lower your premiums and save on insurance. We’re not saying to cut corners or put your most valuable asset at risk. We’re talking about smart, useful things you can do to get the best deal on your home insurance. So, get a cup of coffee, and let’s start this journey to a safer home and more financial freedom.
Getting to Know Your Home Insurance Policy
Before we start cutting those premiums, it’s important to know what you’re really paying for. A home insurance policy is a complicated document, but at its heart, it’s a deal between you and your insurance company. You pay a premium, and in return, the insurance company agrees to pay you for certain losses. Let’s look at the most important parts.
What does a standard policy cover?
Most standard home insurance policies, also known as HO-3 policies, cover a lot of different things. These usually have:
- Dwelling Coverage: This protects the walls, roof, and built-in appliances of your home. * Other Structures Coverage: This protects structures on your property that aren’t attached to your home, like a garage, shed, or fence. * Personal Property Coverage: This keeps your things safe, like clothes, electronics, and furniture, even when they’re not in your home.
- Coverage for Liability: This is a very important part of your policy. If someone gets hurt on your property and you are found to be at fault, it will protect you. It can also protect you from damage that you or your family members do to other people’s property.
- Coverage for Extra Living Costs (ALE): If you lose your home and can’t live there anymore, ALE coverage helps pay for temporary living costs like hotel stays and meals out.
Important Words to Know
- Premium: The monthly, quarterly, or yearly amount you pay for your insurance policy.
- Deductible: The amount of money you have to pay for a covered loss before your insurance company will pay. A higher deductible usually means a lower premium.
- Liability: Your legal duty to pay for an accident or injury.
- Endorsement: A change to your insurance policy that adds coverage. You could, for instance, add an endorsement for jewelry that is worth a lot of money or a business that runs out of your home.
- Exclusion: A part of your policy that says you won’t be covered for certain risks, like floods, earthquakes, or war.
Now that we know the basics of home insurance, let’s get to the fun part: how to lower the cost of home insurance.
20 Useful Tips for Lowering Your Home Insurance Costs
Here are 20 things you can do to lower your premiums and save money on insurance.
Look around and compare prices
This is the most important rule for getting cheap insurance. Don’t just take the first price you get. Different insurance companies use different formulas to figure out how much to charge for premiums, so the same coverage can cost a lot more or a lot less from one company to the next.
- Get at least three quotes: Call a few big and small insurance companies to get a feel for the market. Use online comparison tools: Websites like NerdWallet and The Zebra let you compare quotes from several insurers at once.
- Hire an independent insurance agent: Independent agents work with a number of insurance companies and can help you find the best coverage at the best price.
2. Raise Your Deductible
Your deductible is the amount you have to pay out of pocket before your insurance starts to pay. Your insurance company will give you a lower premium if you raise your deductible because you are taking on more financial risk. You could save up to 25% on your premium by raising your deductible from $500 to $1,000, for instance.
Pro Tip: If you need to file a claim, make sure you have enough money in your emergency fund to cover the higher deductible.
3. Put all of your insurance policies together
If you have both home and auto insurance, you can often save a lot of money by getting them from the same company. A lot of insurance companies give you a discount of up to 30% if you have more than one policy. This is one of the simplest ways to get cheap home insurance.
4. Make your home safer and more secure
A home that is safer is also easier to insure. You may be able to get home insurance discounts if you take steps to make your home safer and more secure.
- Put in a security system: A monitored security system that calls the police or fire department can save you 5% or more. * Put in smoke detectors and carbon monoxide detectors: These are important for safety and can also get you a small discount. * Put in deadbolt locks: Deadbolts make it harder for burglars to break in. Put in a sprinkler system: A home sprinkler system can greatly lower the chance of fire damage and may qualify you for a big discount.
5. Make Your Home Less Likely to Be Damaged in a Disaster
If you live in a place where hurricanes, tornadoes, or earthquakes are common, making your home less likely to be damaged can save you a lot of money on your home insurance.
- Reinforce your roof: A stronger roof is less likely to be damaged in a storm. * Install storm shutters and windows that can withstand impact: These can keep wind and debris out of your home. * Upgrade your plumbing and electrical systems: Older systems are more likely to catch fire or leak water. You can lower your risk and your premium by upgrading them.
Visit the Insurance Institute for Business & Home Safety (IBHS) website for more tips on how to make your home safer from disasters.
6. Keep your credit score high
A lot of states use a credit-based insurance score to help them figure out how much your premium will be. This score is not the same as your regular credit score, but it is based on the same kinds of information. If you have a good credit history, it shows that you are responsible, which can lead to lower insurance rates.
- Make sure you pay your bills on time. *Keep your credit card balances low.* Check your credit report often and fight any mistakes.
7. Check Your Coverage Every Year
Over time, your insurance needs may change. You should look over your policy at least once a year to make sure you have the right amount of coverage and aren’t paying for things you don’t need.
- Did you buy anything big? * You might need to raise the amount of coverage you have on your personal property. * Did you make any changes to your home? You might need to raise your dwelling coverage because the value of your home may have gone up.
- Did you throw away anything that was dangerous? ** Tell your insurance company if you sold your trampoline or filled in your pool.
- Ask About Discounts
There are a lot of discounts that insurance companies offer, but they don’t always tell you about them. Don’t be afraid to ask your agent what kinds of discounts you might be able to get on your home insurance. Some common discounts are
- Discount for new homes: If you just bought a new home, you might be able to get a discount.
- Loyalty discount: If you’ve been with the same insurance company for a long time, you might be able to get a loyalty discount.
- Non-smoker discount: Some insurance companies will give you a discount if no one in your house smokes.
- Senior discount: You might be able to get a discount if you’re retired and over a certain age.
- Green home discount: If an organization like LEED says your home is “green,” you might be able to get a discount.
9. Don’t Make Small Claims
If you make a claim, your premium may go up, so it’s usually not worth it to make a claim for a small loss. If the repair costs less than or not much more than your deductible, you should probably pay for it yourself.
10. Make Your Roof Better
The roof is one of the most A new, high-quality roof can keep your home safe and may even help you save money on your home insurance.
11. Stop Smoking
Some insurance companies, as we said before, give discounts to people who don’t smoke. Quitting smoking can lower your risk of fire and lower your premium.
12. Put in a generator
A backup generator can keep your home running during a power outage, which can stop things like frozen pipes and spoiled food from happening. Some insurance companies will give you a discount if your home has a permanent backup generator.
13. Check out your CLUE report
The full name of CLUE is the Comprehensive Loss Underwriting Exchange. It’s a database that holds information about past insurance claims you’ve made. LexisNexis will send you a free copy of your CLUE report once a year. Check your report for mistakes and argue against them if you find any.
14. Loyalty Pays, But Not Always
Some insurance companies give you a discount for being a loyal customer, but staying with the same company for years on end isn’t always the best idea. You might be able to get a better deal by shopping around every few years because the insurance market is always changing.
15. Take another look at your personal property
Make a list of your things and make sure you aren’t paying too much for insurance on them. You might not need as much personal property coverage as you think if you have a lot of old, worthless things.
16. Think about getting a higher deductible for wind or hail.
You can choose a separate, higher deductible for wind or hail damage in some places. If you live in an area where these kinds of things happen a lot, this can be a good way to lower your premiums.
17. Look at Your Water Damage Coverage
One of the most common and costly home insurance claims is for water damage. Make sure you have enough coverage for water damage, and think about putting in a system that can find leaks to stop problems before they start.
18. Don’t insure the land
Your home insurance should pay for the cost of rebuilding your home, not the value of the land and home itself. Your dwelling coverage should be based on the cost of replacing your home, not its market value.
19. Pay your premium in full
If you can afford it, paying your premium for the whole year up front can often save you money. A lot of insurance companies charge a service fee for payments made every month or every three months.
20. Find out about group coverage
Some companies, alumni groups, and other groups offer group insurance plans that can help you save money on home insurance. Find out if you can get any of these kinds of help.
What Not to Do to Lower Your Home Insurance Costs
It’s great to save money on insurance, but there are some things you should never do to save money.
Don’t Cut Your Liability Coverage Too Much
One of the most important parts of your policy is liability coverage. If someone gets hurt badly on your property, the medical bills and legal fees can be very high. Don’t cut back on liability coverage just to save a few bucks.
Don’t Give Up Important Coverages
You need flood insurance if you live in an area that floods. You need earthquake insurance if you live in an area that is likely to have earthquakes. Most home insurance policies don’t cover these things, so you’ll have to buy them separately. Don’t give up these important coverages to save money.
Don’t Insure Your Home for Less Than It’s Worth
Make sure your dwelling coverage is high enough to pay for the whole cost of rebuilding your home. If your home is destroyed and you don’t have enough insurance, you could have to pay a lot of money.
Questions that are often asked (FAQ)
How much can I save on my home insurance?
There are many things that affect how much you can save, such as where you live, how much your home is worth, and what you do to lower your risk. But if you follow the tips in this guide, you can often save 20% or more.
Will my credit score really change my premium?
Yes, in most states, your credit score can have a big effect on your premium. If you have a good credit score, you might be able to get a lower rate. If you have a bad credit score, you might have to pay a higher rate.
How often should I look for new insurance?
You should look for new insurance every two to three years, or whenever something big happens in your life, like getting married, buying a new house, or having a baby.
Conclusion
It doesn’t have to be hard to lower your home insurance premium. If you take the steps we’ve talked about in this guide, you can lower your home insurance costs, save on insurance, and lower your premiums without losing the coverage you need to protect your most valuable asset.
Keep in mind that the most important thing is to be a smart, well-informed buyer. Don’t be afraid to ask questions, do your research, and bargain. Your wallet will be happy with you.
