More tips on how to get a cheap home insurance policy.
Although I’ve been in my current home for over half a decade, I haven’t updated my homeowners insurance recently. Well, that’s not surprising given that most people buy insurance then just forget about it. From my experience, there’s a lot of inertia involved when purchasing an insurance policy anyway: it sure can feel like a chore to deal with the insurance company. It’s one of my least favorite tasks when it comes to finances. Now since high rates cost homeowners a lot of money, I thought to review some ways to lower our home insurance rates.
How To Lower Your Homeowners Insurance Premiums
1. Shop around!
Just like with all your other insurance policies, do shop around for homeowners insurance. I’ve stayed with the same company for years, but if you want to save, you should check out what the competition has to offer.
Companies like Allstate even have a quote estimator so you can see the ballpark for potential rates. If you don’t want to research online, then contacting a local insurance agent can help you map out the way to lower rates.
2. Consolidate your policies under one insurance company: combine and save!
If you’ve already taken out auto or life insurance from one company, you may want to see if it’s also a good place to pick up your home insurance. I was under the impression that the popular company Geico primarily serves up auto insurance, but it offers insurance for homes as well. Consolidating policies with one company might yield you a discount. You might even save time if you only need to worry about one bill.
3. Study your current insurance policy.
In addition to shopping around, you should study what’s covered under your current policy. Different stages of your life might require less coverage. For example, there might be less expensive electronics in the house if your nest has recently emptied. Or maybe you’ve decided to cash in on clutter and you’ve decluttered the family antiques or your art collection for something minimal. If so, there’s no need to pay extra if you don’t need the coverage. To find out which type of insurance you should get, check out our article: From Auto Insurance Coverage To Health Insurance: Policies You Need.
Have you been with the same insurance company for a few years? Ask if you’re eligible for a loyal customer discount.
Image from Zillow.com
4. Raise your deductible.
For a family member’s health insurance, I figured out that I could raise the deductible by a few hundred dollars to save on the monthly premium. If you try the same strategy for your home insurance, make sure you have money set aside for the deductible in the event you need it.
5. Secure your home better.
How do you protect your castle from crime? Items like deadbolts, alarms, and security systems can help you snag discounts. Your insurance company might have specific recommendations, so contact them before you go on a security shopping spree.
6. Mention your age and review your background. Here’s where age matters!
Other discounts that may add up for you include policies for homeowners over 55 or insurance through groups like AARP or through your employers. Are you a proud graduate of a college or university? Alumni associations like that of UCLA and Stanford have partnerships with insurance companies to offer group rates. Did someone in your household quit smoking? This might be worth a mention to the insurer, too.
7. Be prepared and proactive.
No one wants to think about disasters, but fires and damaging storms can happen to almost any homeowner. The FCIC suggests that one way to lower your premium might be to make your home more disaster resistant. Measures that you can take may include adding storm windows, improving your roof, or updating electrical, plumbing, and heating systems if your home is older.
Before you start work, contact your insurance agent to see if the improvements will help your premium or not. Also, don’t forget to add smoke detectors if you haven’t already; my agent gave me a discount for having them in my home. If you aren’t handy and you need help with getting your home in order, then check out Angie’s list, Craigslist or Yelp to get the professional assistance you require.
8. Check your home’s location and find out if you need extra insurance.
Another way to save hundreds before you buy a house: find out if your home’s in a flood-prone area. Before I finalized the papers on my home, I found out that it wasn’t in a flood zone. If my home had been located just a few streets away, I would’ve needed to purchase extra home insurance! Floodsmart.gov has more information about flood insurance.
You should also check to see if your new neighborhood will require you to purchase more expensive coverage due to events like wind damage, earthquakes, or high crime rates. It might be less expensive in the long run to live in a different area if this isn’t your dream house.
If you have good credit, you should do your best to keep it that way. Be aware that actions like missing credit card payments can drive insurers to increase your rates or even drop you. Here’s more on how to improve your credit score.
Instead of paying high homeowners insurance premiums, you can take a few steps to lower your rates today. Don’t be afraid to compare rates and ask questions to get the rates you want.
Copyright © 2010 The Digerati Life. All Rights Reserved.
{ 11 comments… read them below or add one }
There are so many online insurance policies and we should know the basic quotes from the company. Check out the quotes and then decide which works out for you. Make sure that you compare each insurer’s features, policy coverage information, as well as price to get the best insurance policy for your needs.
Useful suggestions for getting a cheap home insurance policy. Definitely it is always better to shop around online to get access to many homeowner insurance providers. The by and large end effect of this is that you will get informed on the lowest rate, best service that suits your financial plan.
I can say the difference between two policies from various insurers can be HUGE. On the other hand, there are so many various situations which may occur, so you better choose a really complex policy. Flood zone check is a must before you buy the property (but most of us know this). I would stress importance of additional safety devices – smoke alarms, safety door, burglar alarms, well maintained heating system – you don’t do it for the insurance company. You do it for yourself.
Lorne has made an excellent point. The extra precautions can indeed help lower your premium in some cases, but the real purpose is to protect yourself. Even if an insurance provider will not give you a break, it’s very important to still install the safety devices and mechanisms Lorne mentions, and keep them well maintained.
Nice article on how to save on home insurance. Suggestions 1 and 2 I like the best. Shop around and consider consolidating policies. #7 is nice too since we should always be prepared and proactive in order to see if changes can lower our premiums even more.
With the internet at our fingertips, there is no excuse not to at least check your insurance rates verses others at some point in time.
The easiest time to switch is just before your policy is coming due. About a month before the renewal start shopping around. If you find another offer, tell your insurer that you have found a more competitive policy and you are moving on.
Isn’t it amazing that banks not only make money from lending money but also force the buyers to insure the loan they get at their own expense. This is a well designed system in favor of the lender.
To add to the location bit, increased crime rates in certain areas in the past few years can spike your insurance premium. Make sure you not only check the current crime rate for the potential move-in area but also how it has increased or decreased in the past years.
Nice helpful tips. My question is this. Will lowering your homeowner insurance also lower your monthly mortgage payment?
@Mark,
Insurance and your mortgage are separate things you pay for, so they don’t influence each other. However, depending on how your payment arrangements were made, you may be required to add funds in an escrow account that will then be deployed towards homeowners insurance and property taxes. If you lower your homeowners insurance then your payments to the escrow account will be lowered in this particular case.
I was just speaking to my insurance agent and I asked him “how’s business”? His response: he’s had to work 3x times harder to get the same amount of business. I wonder if this includes the adjustments over the past several years? After all, I’m sure the insurance industry had its boom during the real estate bubble, given the number of homes that needed homeowners insurance, right? So I wonder if he’s seeing a return to normalcy or whether he’s really seeing a genuine slowdown in business (since everything is relative).
One thing my agent did say is that a lot of people are hurting these days and so they are dropping their insurance policies. Seems like it’s one of the things that people shed when they are needing to cut back. Tough times are leading many people to taking on huge risks with their assets, finances and possessions.