How to save on homeowners insurance

Is it necessary to have home insurance? Yes, if you have a mortgage lender. However, there are ways to save money on homeowners insurance while still protecting your investment.

Even after your mortgage is paid off and a homeowners insurance policy is no longer required, it makes good financial sense to insure your home and its valuables. If you do not have coverage, losing your home in a fire, for example, could cost you hundreds of thousands of dollars. That is why insurance professionals recommend that you keep homeowners insurance after you have paid off your mortgage, even though you are not legally required to do so if your loan is paid off in full.

The key to understanding how to save on home insurance is to strike a balance between having adequate coverage in the event of a disaster and keeping your premiums low. Here are some ideas for lowering your home insurance premiums.

1. Bundle your insurance policies

You might have insurance from more than one company. Your auto insurance, for example, may be with the same company you've been with since you were a young adult, and your life insurance may be with the insurer your employer uses. Bundling your insurance products by using a single insurance company for all of your needs can save you a lot of money, as most insurers will give you a multi-policy discount to reward your loyalty.

Samantha Rheel, Senior Sales Executive at Coughlin Insurance Services in New York, agrees that bundling policies can save money.

Rheel explains that “companies target packaged policies rather than monoline policies, offering the best rates.” “If you work with an agent, asking them to quote your other lines of business could not only get you better coverage but also result in significant savings.”

Inquire with your agent or insurance provider about any discounts that may be available when you combine your policies, such as auto and life insurance. Combining at least two policies could result in substantial savings.

2. Shop around

A home insurance comparison is similar to comparing apples in the grocery store.

Each insurance company has its own set of rules and can charge different rates depending on the extent of your home's coverage. With a home insurance comparison, you can see the premiums from various companies as well as whether you qualify for any discounts. Prices can vary from provider to provider, so comparing multiple quotes is an excellent way to determine which company will provide you with the lowest premium.

Cross-reference your home insurance options with this list of car insurance providers to find companies that can offer you both if you want to capitalize on bundling savings to lower home insurance costs.

3. Ask for discounts

Find out what discounts your insurance company can provide you with and how you can qualify for them. Discounts can range from loyalty and multiple-policy discounts to home improvement discounts.

Rheel says, “Insurance companies love to see a responsible homeowner.” “Keeping up with updates to your roof, heating and plumbing system, and electrical system will help.”

Rheel also recommends taking precautionary measures such as installing an alarm system, surveillance cameras, and water shut-off valves.

“Insurance companies have gotten pretty creative with the types of deductions and discounts they offer,” Rheel says. “The more precautions you take, the better your chances of qualifying for their top-tier discounts.”

If you're looking for ways to save money on homeowners insurance, discounts are a great place to start. Here's a quick rundown of some of the most common discounts:

Discounts for safety measures: Installing smart smoke detectors, for example, could save you money. Homeowners insurance providers frequently offer discounts for home security systems, so consider investing in one to save money on your home insurance.
Roofing discounts: Your roof does a lot to protect your home. A newer roof, especially one made of impact-resistant materials, can result in lower insurance premiums.
Loyalty discounts: If you've been with your insurer for a while and are looking for ways to save money on homeowners insurance without switching, call and ask if they offer a loyalty discount.

4. Evaluate your policy and increase your deductible

Looking for more ways to learn how to save money on home insurance? Examine your coverage carefully. Some aspects of your home insurance policy are frequently required, such as:

Damage to the house and other structures, such as a fence or a shed, is covered.
Personal property insurance
Additional living expenses if you have to stay somewhere else because your home is uninhabitable as a result of a covered claim.
Medical payments and liability

“These coverages are the foundation of a homeowner contract and should never be removed,” Rheel says. Going without homeowners insurance is not worth the risk, but that doesn't mean you have to pay for extra protection. You can check with your provider or agent to see if your policy includes any optional coverages that aren't a good fit for your needs.

You should also think about increasing your deductible. This is the amount you pay for a covered claim out of pocket. If your deductible is $500, and you have a $4,000 covered claim, you will pay the first $500, and the insurance company will pay the remaining $3,500.

A higher deductible means you'll pay more if you file a claim, but the higher your deductible, the lower your premium. Keep in mind that increasing your deductible means you'll have to pay more money out of pocket. Before you make the change to your policy, make sure you can afford a higher deductible.

5. Improve your credit score

Unless you live in California, Maryland, or Massachusetts, where insurance companies are prohibited from using a homeowner's FICO to determine premium price, a low credit score may result in a higher monthly premium.

Laura Adams, an insurance expert, explains:

“When you have good credit, home insurers see you as a less risky customer who is likely to make few or no claims.”

If your credit score has improved, Adams recommends following up with your insurer. The higher your score, the more likely you are to pay less.

6. Get an agent

An agent is someone who not only helps you choose insurance, but also assists you in filing a claim and repairing damages with local contractors. Your agent may be paid a commission based on the type of coverage you purchase.

Experienced agents understand the intricacies of the insurance companies they represent and can offer you valuable advice and recommendations on the type and amount of insurance you may require, as well as whether you require additional coverage.

“You get personalized service and someone who looks out for your best interests,” Rheel says. “In the event of a claim, a good agent will fight for you, acting as a liaison between you and the carrier.”

7. Make home improvements

Your insurance provider may reward you with lower home insurance premiums if you make certain changes to your home. There are two ways to get these home improvement discounts.

Protect your home from natural disasters.

Here are a few updates you can make to your home to make it safer — and possibly lower your home insurance premiums:

Purchase a new roof: As previously stated, some insurance companies provide discounts for storm-proof roofing, and newer roofs are less likely to be damaged by storms than older roofs.
Update your electrical system: Updating your electrical system can reduce your risk of a home fire, so insurers may reward you with lower premiums.
Update your plumbing: Lowering your risk at home means lower home insurance costs. As a result, new pipes, which can help to avoid water damage at home, may incentivize your insurance provider to reduce the cost of your policy.

Make your home more secure

Similarly, safety and security features indicate a lower risk and may result in home insurance discounts. For instance, you may be able to save money by installing:

More/smart smoke alarms: If you do not already have a smoke detector in each room of your home, install one and notify your insurance company. Consider smart smoke alarms when comparing new alarm options. Your insurer may offer you greater discounts for alarms that can send a notification to your phone if you are away from home, for example.
Fire sprinklers: If a fire breaks out in your home, these systems will ensure that the damage is minimized. Sprinkler systems are frequently discounted by insurers because they reduce the cost of a claim.
Burglar alarms: Because your home insurance policy includes theft coverage, insurers may provide a discount for installing theft prevention measures such as a home security system.

How to save on homeowners insurance

There are numerous ways to save money, whether it is time to switch insurance companies or consult with your agent about the best coverage for you. Home insurance is necessary, but it does not have to be overpriced.

Examine your coverage to ensure you have everything you require, inquire about discounts, and keep your credit score as high as possible.