If you own a home or property, you’ll need to purchase home insurance to protect yourself. A homeowners insurance policy is vital for everyone who owns their own place. Without it, you can find yourself deep in financial trouble if bad luck befalls your home (or anyone in it).
But as with all types of insurance, you want to make sure you’re getting a good deal when you purchase your homeowners insurance. And for better or for worse, a lot of different things can factor into your homeowners insurance rates. It’s a little bit of a game to find the best rates for you and your home, but it can be done. However, getting the best possible homeowners insurance premiums requires a little bit of planning.
When it comes to getting the best rates, it’s less about what you do — and more about what you don’t do. Here are eight common bad decisions that negatively impact homeowners insurance rates. Stay away from these bad insurance habit and you’ll save yourself money, time, and a future headache!
Not Reading Your Policy Carefully
As great as insurance is, it comes from a business, and that business has a goal — to make money. That’s not to say that home insurance companies are dishonest, but it’s important to be aware of that fact.
An insurance company or agent might try to up-sell you on lots of extra kinds of insurance that cost extra — and those costs can add up. It’s vital that when you’re signing up for a homeowners insurance plan, you read the policy all the way through, to make sure that you’re not spending extra money for something you don’t want or need.
On the other hand, you’ll want to carefully read through the policy to make sure you understand what isn’t covered as well. If you live in a place with a history of flooding for instance, make sure you know what your insurance policy will pay for — and what you will be forced to cover out of pocket. If you live in a higher risk area and think you’re missing a key coverage, it might be worth getting extra coverage so you don’t face an expensive surprise down the road.
Having a Poor Insurance Score (and Not Doing Anything About It)
You know how people have credit scores? (Hopefully you’re keeping tack of yours, since it can impact your insurance rates — more on that later.) Well, people also have an insurance score. Things like bankruptcy filings, garnished salaries, tax liens, and large amounts of defaulted debt all negatively impact your insurance score, which raise your homeowners insurance premiums.
One frustrating thing about insurance scores — most of these scoring systems are proprietary, so you can’t go check on how it’s impacting the quotes you’re getting from your insurance agent. But if you do have any of the issues mentioned above, try to sort those out. Once you do, you can compare and switch carriers (more on that later) to see if you can get a better price for your premiums.
Not Maintaining Your Home
Insurance companies generally price their policies by a simple rule — the less chance of you filing a claim, the lower your premium will be. In other words, insurance carriers tend to give “lower risk” homeowners better rates.
A home that isn’t well maintained is a hassle for home insurers. Not maintaining your home means there’s increased risk of serious damage, and that the severity will grow if there’s an accident or natural disaster. And while insurance companies often won’t offer payouts for claims when you’ve been negligent, they still have to go through the process of proving your negligence.
Basically, a poorly maintained older home will make you a “higher risk” applicant. And that means your premium will have higher rates that other homeowners.
Not Working to Raise Your Credit Score
It’s unfortunate and problematic that credit score dictates much of our lives and our purchases, but that’s currently the reality. Insurance companies rely heavily on your credit score to determine your rates. And if you have a bad credit score, your homeowners insurance rates will be higher. If you take steps to improve your credit score, you might have an opportunity to save money on insurance.
Requesting a Claim that You Didn’t Need
Every time you make a claim to your homeowners insurance company, it goes on record, and your insurance company is likely to raise your rates. Even if they don’t, the next company that you get homeowners insurance from will almost surely give you a more expensive premium than they otherwise would have. So keep an eye on your claims history.
Not Shopping Around and Bundling
You’ll notice that a lot of these decision take time to fix. It can take months or even years to make improvements to your credit score or work on your home. But there’s one method that can save you money on home insurance in just seconds.
When it comes to any kind of insurance, you always want to shop around, and you always want to try and bundle your home and car insurance. These are the quickest and most reliable ways to make sure that you’re getting the lowest rates on your homeowners insurance.
Unfortunately shopping around for the best quote can be a time consuming process. That’s why companies like Jerry.ai are so helpful — they do all the comparing for your and let you know which insurance companies can provide you with the best rate.
Filling Your Home With Items That Will Raise Your Premium
There are certain items that automatically raise a lot of homeowners insurance premiums. Two examples are trampolines and wood burning stoves. If you fill your house with items that raise your rates, you’ll quickly notice it when it comes time to pay your homeowners insurance.
Not Checking for Discounts
Most insurance companies offer a large number of discounts, for everything from first time homeowners, to active military and veterans, to teachers. Make sure to check for as many discounts as possible, so you can start to lower your rate.
Avoid these eight mistakes, and you’ll be well on your way to the best homeowners insurance rates.