Home > Personal Finance > 9 Tips to Cut the Cost of Homeowners Insurance

Comments 0 Comments

Although you may dread doling out large sums of cash for your homeowners policy year after year, you can’t afford to go without it. That would be crazy. However, you don’t have to break the bank to carry suitable coverage.

It’s nearly 2015, so it’s time for a year-end review of how much you’re paying for homeowners insurance.

1. Increase Your Deductible

The more liability you assume, the lower the rate you’ll pay. You can save 10% to 30% on your premium by raising your deductible from $250 to $1,000.

Afraid that you may not be able to afford the higher amount you’ll pay out-of-pocket in the event of an emergency? Beef up your emergency fund to cover the increase. That way, the money will be there when you need it, and you’ll save a substantial amount of money each year on your policy.

2. Check for Multiline Discounts

It pays to bundle up. According to the Insurance Information Institute, some companies will reduce the price of your policy by 5% to 15% if you purchase two or more policies with them.

3. Don’t Overinsure (but Don’t Underinsure Either)

This is often confusing to people: You want sufficient insurance to cover the cost of replacing your home from scratch, but since your lot can’t burn down, there’s no point in insuring its market value. Verify the amount your insurance company says is the replacement cost of your home by multiplying the cost per square foot for residential building in your area by the number of square feet you have.

But be careful. It’s not unusual for homeowners to underinsure, and this isn’t a place to cut corners.

Also make sure your insurance will cover the cost to replace the contents of your home with new items.

4. Shop Around

For this year-end review, carve out a chunk of time to shop around for more affordable insurance.

If you find a better deal elsewhere, ask your current insurer whether you can get a better rate. You may find you qualify for discounts you’re not aware of.

If you are considering switching companies, research the financial health of the new company. There’s no point in paying thousands in premiums and being unable to recoup any losses if you must file a claim. An analysis can be done through independent rating agencies, such as A.M. Best and Standard & Poor’s, and your state insurance department.

5. Inquire About Discounts 

Although they vary by insurance company, you may qualify for discounts if you:

  • Reside in a home with certain upgrades.
  • Have not filed a claim in a specified number of years.
  • Don’t allow smoking inside your home.

Those who are senior citizens or associated with certain professional organizations may also be eligible for discounts. Call your insurer to see what discounts may be available to you.

6. Secure your Home with an Alarm

A number of insurers offer discounts of at least 5% if your home is equipped with a smoke detector, burglar alarm or deadbolt locks. This amount may increase to 15% or more if your alarm has active monitoring with dispatch capabilities, and your home contains a modern sprinkler system, the Insurance Information Institute says. (On a tight budget? See “20 Tips to Harden Your Home Security for Next to Nothing.”)

7. Remain Loyal

The Insurance Information Institute also says that your insurance company may provide a 5% discount if you have been with it for at least three to five years, and 10% for six or more years. Although this incentive is enticing, it is still important to shop around annually to ensure you are getting the best price.

8. Review the Policy Limits 

Be sure that your insurance is sufficient to cover the replacement cost of everything in your house, including valuables that become worth more over time. On the other hand, if you no longer own valuable diamond jewelry or an extensive collection of art, you no longer want to pay for the extra coverage.

This year-end review is a good time to make sure your inventory of your possessions, including photos or a video, is up-to-date and saved somewhere outside your home — for instance, in the cloud. Don’t have an inventory of your possession? Compile one now.

9. Maintain Good Credit

Premiums may be higher or applicants may not even be eligible for homeowners coverage if they have poor credit scores. (If you don’t know yours, you can see two scores for free, updated every 14 days, on Credit.com, along with personalized tips for improving your score.)

This post originally appeared on Money Talks News.

More from Money Talks News:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team