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How to save on homeowners insurance

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Home insurance is a requirement typical of mortgage lenders, which leads many homeowners to include it as part of their budget. But if you have paid off your mortgage or don’t have a mortgage at all, having a homeowners insurance policy can still be a critical part of your financial plan and could save you from paying the full cost out-of-pocket for a covered loss or damages.

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 have 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 needs could save you significant money, as most insurers will give you a multi-policy discount to reward your loyalty.

Samantha Rheel, a Senior Sales Executive at Coughlin Insurance Services in New York, agrees that bundling policies can result in savings.

“Companies target packaged policies rather than monoline 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 are offered when you add on other policies, like auto and life insurance. Bundling at least two policies could result in significant savings.

2. Shop around

Like comparing apples in the grocery store, you can perform a home insurance comparison.

Each home insurance provider has its own guidelines and can set different prices based on the coverage of your home. With your home insurance comparison, you can see the premiums from multiple companies and if you qualify for any discounts. Prices can fluctuate from provider to provider, so comparing multiple quotes is a great way to see what company can offer you the lowest premium.

If you are trying to capitalize on bundling savings to lower home insurance costs, consider cross-referencing your home insurance options with this list of car insurance providers to find companies that can offer you both.

3. Ask for discounts

Find out from your insurance provider what discounts it can offer you and how you can qualify for them. Discounts can run the gamut, from loyalty and multiple-policy discounts to discounts for home updates.

“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.”

If you are wondering how to lower homeowners insurance costs, discounts are a great place to start. Here is a quick list of common discounts:

  • Discounts for safety measures: Something as simple as installing smart smoke detectors could save you money. Homeowners insurance providers also frequently offer discounts for home security systems, so consider investing in one to possibly get lower home insurance premiums.
  • Roofing discounts: Your roof does a lot to protect your home. A newer roof, particularly one built with impact-resistant materials, can result in lower premiums.
  • Loyalty discounts: If you have been with your insurer for a while and you are wondering how to lower homeowners insurance costs without switching, call and ask if they offer a loyalty discount.

Learn more: Affordable home insurance companies

4. Evaluate your policy and increase your deductible

Looking for even more ways to learn how to lower home insurance? Take a closer look at your coverage. There are some parts of your home insurance that you are often required to have, such as:

  • 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 your home is uninhabitable due to a covered claim
  • Liability and medical payments

“These coverages are the bones of a homeowner contract and should never be removed under any circumstances,” Rheel says. Most insurance professionals would say that going without homeowners insurance is not worth the risk, but that does not mean you need to pay for excess coverage. You can talk to your provider or agent to see if there are optional coverages included on your policy that are not a good fit for your needs.

You may also want to consider raising your deductible. This is the amount you pay out of pocket for a covered claim. If your deductible is $500, for example, and you have a covered claim worth $4,000, you will pay the first $500 of the claim and the insurance company will pay $3,500.

A higher deductible means you will pay more in the event of a claim, but the larger your deductible, the lower your premium. Keep in mind that raising your deductible means you are responsible for more money out of pocket. Be sure that you can afford a higher deductible before you make the change on your policy.

5. 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.

6. Keep your roof in good condition

A sturdy roof is one of the first defenses to protecting your family, your belongings and the structure of your home. To that end, the age and condition — and sometimes, even shape and materials — of your roof can be considered by an insurance company when calculating homeowners insurance premiums. If your roof is too old or is in visibly poor condition, some companies may deny coverage. To keep your roof in good condition, it’s important to conduct regular inspections and perform repairs when necessary to help minimize the financial impact if a loss were to occur.

7. Choose your claims carefully

Filing a homeowners insurance claim can potentially increase your premiums in the future. Although filing a claim is necessary for any large covered losses, it is generally not advisable to file a claim for every small loss, especially if the cost to repair is under or close to your deductible limit. In addition, many insurance companies offer a claims-free discount, which would likely not be applied to homeowners insurance policy if there is a history of small claims.

Frequently asked questions

What coverage options are included in a homeowners policy?

In general, a standard homeowners insurance policy starts with six coverage options: dwelling amount, other structures, personal property, liability protection, medical payments, and additional living expenses. Depending on the company and your personal needs, you may also have the option for scheduled personal property, identity theft and more.

What isn’t covered by a standard homeowners policy?

Floods and earthquakes are the most common loss types not covered by the standard homeowners insurance policy. If your home is in or near a flood zone, a lender may require you to purchase a separate flood insurance policy. Although earthquake insurance isn’t typically a requirement like flood insurance is, homeowners near an active fault line may find it a necessary consideration.

How much homeowners insurance do I need?

Determining how much homeowners insurance you need depends on a variety of factors. One starting point is the square footage of your home, along with any completed renovations and repairs as well as an estimate of your personal belongings. From there, a licensed insurance agent in your area can help to calculate your home’s dwelling amount and ensure it’s in line with the cost of materials and labor in your area.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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