Homeowners insurance is part of the deal when you own a home with a mortgage, but there are ways to save on homeowners insurance while still protecting your investment.
It makes good financial sense to insure your home and the valuables in it, even after your mortgage is paid off and it’s no longer mandatory to have a homeowners insurance policy. Losing a home due to a fire, for example, could cost you hundreds of thousands of dollars if you don’t have coverage. That’s why insurance pros advise that you hold onto homeowners insurance after you’ve paid off your mortgage, even though you aren’t legally required to maintain coverage if your loan is paid in full.
The key to understanding how to save on home insurance is to find the balance between having enough coverage in case of a disaster while keeping your premiums affordable. Here are some ways to lower home insurance costs.
1. Bundle your insurance policies
You may have insurance from more than one provider. For example, your auto insurance may be with the same company you’ve been insured with since you were a young adult and your life insurance is with the insurer your employer uses. Bundling your insurance products by using one insurance company for all your insurance needs could save you significant money, as most insurers will give you a multi-policy discount on all your policies to reward your loyalty.
“Companies target packaged policies rather than online policies, offering the best rates,” Rheel says. “If you are working with an agent, requesting them to quote your other lines of business could not only get you better coverage but turn out to be pretty significant savings.”
Ask your agent or insurance provider about what discounts they offer when you add on other policies, like auto and life insurance. Bundling at least two policies could save you 5 percent to 15 percent, according to the Insurance Information Institute (III).
2. Shop around
Like comparing apples in the grocery store, you can compare home insurance costs between companies.
Each lender has its own guidelines and can set different prices based on the coverage of your home. Compare insurance companies and their offerings, see what deals they offer and if you qualify for any discounts. Prices can fluctuate from lender to lender. So, don’t feel stuck in one place.
Also look into price matching. If you were quoted a cheaper premium with the same coverages by another insurer, contact your agent to see if they’ll match the price. That way you can stick with your existing insurance provider while still getting the best deal.
3. Ask for discounts
Find out from your insurance provider what discounts they can offer you and how you can qualify for them.
“Insurance companies love to see a responsible homeowner,” Rheel says. “Keeping up with updates to things like your roof, heating and plumbing system and electric will help.”
Rheel also suggests taking preventative measures, like installing an alarm system, surveillance cameras and water shut-off valves.
“Insurance carriers have become pretty creative when it comes to what type of deductions and discounts they offer,” Rheel says. “The more preventative action you take, the better chance you have at qualifying for their top-tier discounts.
4. Improve your credit score
Unless your home is in the state of California, Maryland or Massachusetts, where insurance companies are prohibited from using a homeowner’s FICO to determine premium price, a low credit score could mean you’re paying a higher monthly premium.
Insurance expert, Laura Adams, explains:
“When you have good credit, home insurers view you as a less risky customer who may make few or no claims.”
Adams recommends following up with your insurer if your credit score has improved. The higher your score, the better chances you have of paying less.
5. Get an agent
An agent is not only someone who helps you select insurance, but also helps you file a claim and help get damages fixed with local contractors. Depending on your agent, they might get paid a commission based on the type of coverage you buy.
Experienced agents know the ins and outs of the insurance companies they represent and can provide you with valuable advice and recommendations on the type and amount of insurance you may need or if you need additional coverage.
“You receive personalized service and a person looking out for your best interest,” Rheel says. “A good agent will fight for you in the event of a claim, acting as the liaison between you and carrier.”
6. Check your coverage
Looking for even more ways to learn how to lower home insurance? Take a closer look at what you’re paying for. There are some parts of your home insurance that you’re required to have, like:
- Coverage for damage to the house and other structures, like a fence or a shed
- Personal property coverage
- Additional living expenses, in the event you have to stay somewhere else if you can’t live in your home
- Liability and medical payments
“These coverages are the bones of a homeowner contract and should never be removed under any circumstances,” Rheel says. Which means when you’re putting together your policy, don’t skimp on these. However, you’ll want to look over other parts of your coverage to see if you can drop or reduce something you don’t need.
However, you’ll want to look over other parts of your coverage to see if you can drop something you don’t need. You may also want to consider raising your deductible. The larger your deductible, the less you’ll pay in monthly premiums. If you raise your deductible from $500 to $1,000, for example, you could save as much as 25 percent on your premium, according to the III.
Keep in mind that raising your deductible means you’re responsible for more money out of pocket before insurance kicks in. If you’re afraid you won’t be able to cover costs before insurance coverage starts, raising your deductible might not be the best idea for you.
How to save on homeowners insurance
Whether it’s time to switch insurance companies or talk to your agent about the right coverage for you, there are plenty of ways to save. Home insurance might be necessary, but it doesn’t mean you need to overpay for it.
Review your coverage to make sure you have everything you need, ask about discounts and keep your credit score as high as you can.