Homeowners insurance is part of the deal when you own a home with a mortgage, but there are ways to lower the amount you pay while still protecting your investment.
It makes good financial sense to insure your home and the valuables in it. A homeowners policy is actually required if you own a home financed with a mortgage from a bank or other lender. Condo associations may also require that your unit be covered.
Samantha Rheel, Senior Sales Executive at Coughlin Insurance Services in New York, says carrying homeowners insurance is prudent for many different reasons.
“Homeowners insurance isn’t just a policy you need when you are obtaining a mortgage,” she says. “It’s an investment in your future and peace of mind.”
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.
A homeowners policy covers your home’s structure and possessions. It also defrays the cost of temporary housing if you can’t live in your home due to a covered peril. Homeowners insurance also provides liability coverage that protects your assets in the event someone sues you for bodily injury or property damage that you or a family member cause.
Here are some ways to lower the costs.
1. Cover multiple policies
Having one policy through one insurance provider is nice, but bundling your products could give you significant 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 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
A low credit score could mean you’re paying a higher monthly premium than if you had a better score. The higher your score, the better chances you have of paying less.
While you shouldn’t have trouble getting covered — especially since lenders require you to have basic home insurance — you could be facing higher costs because of your less-than-stellar credit.
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. But they can be an invaluable resource when it comes to dealing with home insurance.
“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
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 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.
Carefully keep costs low
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.