8 Easy Ways to Lower Your Homeowners Insurance Costs
- 1. Select a higher deductible
- 2. Improve your credit score
- 3. Lower your risk profile
- 4. Insure for your home’s rebuild cost, not market value
- 5. Bundle your insurance
- 6. Bolster your home security
- 7. Find out about discounts
- 8. Shop around
The average homeowners insurance premium in the United States is around $1,200 per year. At roughly $100 per month, that’s an expense many first-time homeowners aren’t prepared for. And whether you pay more than that or below the average, it can stretch your budget to ensure you have the appropriate coverage for your property.
But, there are some easy ways you can lower your insurance premiums. Some options require investments in your home, while others are at no cost at all. Here are eight ways to keep your premiums low.
1. Select a higher deductible
One of the easiest ways to lower your homeowners insurance costs is to raise your deductible. For a good blend of protection and affordability, a $500 deductible is often a good choice. If you go with a $1,000 deductible, you can save as much as 25% on your policy (about $300 per year on a typical insurance policy).
Keep in mind that if you can’t afford to pay $1,000 should a claim arise, it’s better to stick with a deductible you can afford. Conversely, if you can afford an even higher deductible (say, $2,500 or even $5,000), your annual savings will be even higher.
2. Improve your credit score
In all but three states, your credit score is connected to how much you pay for insurance. To lower your premiums, work towards the best credit rating you can possibly achieve.
Each insurer calculates policy costs based on your individual credit, property type, neighborhood, and other factors, so there’s no certain amount it can lower costs. However, every little bit helps. Pay bills on time, don’t overextend on credit, and maintain long-term credit when you can.
3. Lower your risk profile
If you have an old roof, your appliances are ancient, and you have wiring or plumbing that’s no longer to current code, you could be paying quite a bit more on homeowners insurance costs. When you update your home and remove risky appliances or replace aging shingles, there’s less risk of an imminent claim to your insurer. Completing those renos will help you save money in the long run.
4. Insure for your home’s rebuild cost, not market value
If you would list your home for $300,000 on the market today, odds are good that your actual rebuilding costs are lower. Since you insure your structure for rebuilding costs and not land value or outbuilding values, there’s no benefit to value it higher than true rebuilding costs. Keep market value and rebuilding costs separate in your mind when purchasing home insurance and you will save money.
5. Bundle your insurance
If you have an auto insurance or life insurance policy, there are usually benefits to buying your homeowners insurance there too. You can save up to 25% when you bundle your home and auto insurance with some insurers.
6. Bolster your home security
By protecting your property from the risk of unexpected losses, your home insurance costs can be decreased. Most insurers offer discounts for a variety of security and monitoring options such as smoke detectors, alarm systems, and deadbolt locks. It can range from 5% and up, depending on the insurer and the security you have installed.
7. Find out about discounts
You may qualify for discounts you just aren’t aware of… yet. For example, Progressive offers discounts for paying in full, receiving an advance quote, new home construction, and even using e-documents. Some insurers have loyalty discounts and rate reductions for certain front-line workers and vets.
8. Shop around
Some insurance providers are better suited for your unique situation than others. For example, getting homeowners insurance with bad credit can be very costly unless you find a no-credit-check insurer. Shopping for the best price is how you can save money on your homeowners insurance costs.