11 Ways to Save Money On Your Home Insurance
Now that you know the basics of your home insurance policy, here are 11 ways you can pay less. In many cases, you can get the same level of coverage for fewer dollars.
- One Insurer, Multiple Policies -- Do you have an automobile insurance policy? Is it with the same insurance company that provides your homeowners insurance? If they aren't you could be paying too much on both policies. Almost every insurance company that sells home insurance wants its policyholders to also buy auto insurance from them. So, they offer “multi-policy discounts” to entice you. Usually, these discounts are at least 10%, sometimes as high as 20% -- and some insurers apply huge discounts to both the auto and the homeowners policy.
- Raise Your Deductible -- The deductible is the amount you pay before insurance kicks in if you have a claim. The higher your deductible is the less you pay for your policy. Some carriers offer massive discounts for $2500 deductibles or $5000 deductibles. Of course, you risk more out-of-pocket if you have a claim, but you save on your premium each and every year.
- New Is Better -- Insurers really like newer homes. That’s because it’s less likely something will go wrong with the electrical, heating and plumbing systems. Most every Home Insurance Company offers discounts of as much as 8% to 15% if your residence is new.
- Location, Location, Location -- If your home is near a fire station, you will pay less for your home insurance. If your neighborhood has fire hydrants you will pay less for your home insurance. If you're in a high-crime area, you could pay more. Where you live will impact the cost of your home policy.
- Insure the House, Not the Land -- Nobody is going to steal your land. Fire and high winds won’t “destroy” it. And your home policy doesn’t cover your land anyway. as a matter of course, we run a replacement cost estimate to determine what it will cost to rebuild your home – and other structures – if they get completely destroyed in a claim. The market value of your land doesn’t matter. If you include the value of the land, you’re paying too much.
- Don’t Insure What You Don’t Have – Your home policy includes an automatic protection limit for your personal property. Some of our carriers will allow this to be adjusted. If you don’t need all that coverage some carriers give us the flexibility to lower the limit. Your agent should help you with a quick personal property calculation. Also, pay particular attention to "target items" subject to special limits, items such as jewelry, art, furs and guns.
- Being Safe Pays You Back -- Smoke detectors, burglar alarms and deadbolt locks are usually worth discounts of at least 5% on your home policy. You can save 15% to 20% if you install a sophisticated sprinkler system or an monitored alarm system that rings at the police station or a security company. Before you install one, check with your insurer to find out what type of system qualifies for a discount and how much you would save on your premium if you installed the system. These discounts can very widely amongst carriers.
- Where There’s Smoke . . . -- There’s fire. Smoking (unattended cigarette butts, etc.) produces tons of residential fires in this country each year (up to 30,000 a year by some estimates). That’s why some insurers have discounts if all the residents in a home are nonsmokers.
- Don’t Jump Around -- Some insurance companies automatically have discounts for policyholders who have been with the companies for a certain number of years. For example, 5% for at least three years, 10% for at least five years. Sometimes, "shopping around" is not a good thing.
- Monitor Your Automatic Inflation Adjustment – Virtually every home insurance policy includes an automatic inflation adjustment every year, automatically increasing your Dwelling Limit every year. The theory is to make sure your insurance keeps up with the rising costs of rebuilding your home and that you have enough insurance to replace your home if it is destroyed. Over time this automatic inflation adjustment can get out of whack with reality. If you think your Dwelling Limit is too high, ask us to run a new replacement cost estimate. You may be able to lower your costs while still being fully protected.
- Good Credit = Lower Rates – Even though California prohibits this, most companies these days use your credit history as part of their pricing structure. People with better credit will have more insurance options with some carriers.