How to Save on Homeowners Insurance

The average homeowner pays nearly $1,100 a year for home insurance, according to the latest data from the Insurance Information Institute. That’s money well spent — your rate pales in comparison to what it would cost to rebuild your house and replace your belongings after a disaster. But it’s good to know whether you might be able to trim costs.

Here are seven ways to save on homeowners insurance and get the protection you need at a more budget-friendly price.

Bundle your auto and home insurance policies
One of the easiest ways to save is to combine your home and auto coverage with the same company. Many well-known insurers offer a discount if you carry multiple policies with them, including Allstate, Progressive and American Family.

Bundling auto and home insurance typically saves you 10% to 20% on your homeowners rate, although it could be higher or lower depending on your insurer.

Make your home more secure
When calculating your rate, insurance companies look at your home’s susceptibility to threats such as burglary, fires and storms. You can limit risk and potentially qualify for cheaper rates by upgrading outdated systems like plumbing and electrical and by adding features that make your house tougher to penetrate — think storm shutters, impact-resistant roofing and deadbolt door and window locks.

By avoiding incidents and claims, you also give your insurer less incentive to increase your rates come renewal time. Because certain home improvements won’t be cheap, check with your insurer beforehand to see how much a given discount will save so you can make sure your spending isn’t out of proportion to the savings.

Look into more-obscure discounts
While discounts for bundling and home safety features may be best-known to shoppers, the possibilities don’t stop there. For instance:

Esurance and Farmers reward customers if no one living in the house smokes.
Travelers and Liberty Mutual offer a discount if you recently bought your home.
You could even get a deal at Allstate or Amica Mutual simply for paying your premium via automatic bank payments.
That’s just a small sampling. Ask your agent or insurance company about extra perks you could qualify for; you may already meet the criteria for some.

Raise your deductible
Your deductible is the amount insurers subtract from a claim settlement for property damage. A common deductible amount is between $500 and $1,000; increasing this number may trigger a rate reduction. It might also dissuade you from filing minor damage claims, as the repair bill is less likely to exceed your deductible. Insurers are less likely to increase rates at renewal if you’ve gone claim-free.

Raising your deductible does means you’ll shoulder more of the financial burden in a covered loss, so this isn’t a decision to make lightly. But if you have ample funds squirreled away for emergencies, you might decide to take that risk for the chance at lower rates today.

Improve your credit score
In many states, companies are permitted to use a credit-based insurance score to help predict the likelihood of future claims, and those with poor credit may face higher rates. If you fall into this camp and have a poor FICO score (under 630), take steps to shore up your credit, such as paying your bills promptly, paying off card balances that are nearing their limit, or simply reading your credit report closely and fixing any errors.

Reassess your belongings and personal property coverage
It’s wise to periodically examine how much stuff you have and how much it’s worth, to see whether your coverage still lines up. If you recently sold valuable antiques or jewelry, for instance, you could cancel any high-limit insurance, called scheduled property endorsements, that you took out for such expensive items.

Shop around
Rates can differ from one company to the next, so it pays to compare estimates from several providers. You might find the insurer that offered the best rate last time you shopped no longer has the top deal. Or you could find that loyalty discounts offered through your plan make staying put a smarter decision. But you won’t know unless you compare.

Ready to shop around? Start by contacting Michael Webster.