Save Money on Homeowners Insurance

By Sanford Ellowitz on April 7th, 2010

Homeowners Insurance

If you're a homeowner, you can't do without home insurance, but you can take steps to make it more affordable.

Shop Around

Your first step toward affordable home insurance is to shop around. By collecting free online quotes, you can compare rates from multiple insurance companies. That way you can find the best policy for your needs at the best price.

Getting Discounts

The next step is to ask your insurance company which discounts you may qualify for. To maximize your discounts you should ask to go through the list of discounts the insurer offers. You may be surprised to find that you are eligible for discounts that you did not know existed.

Some common discounts home insurance companies may offer:

  • Multi Policy: Having more than one policy, such as homeowners and auto, with the same insurance carrier often results in a discount on both policies
  • Loyalty: Staying with the same company may get you a reward because the insurer already knows you're a good risk
  • Retired/Senior/Work at Home: People in these categories tend spend more time at home, which may reduce instances of robbery or fire
  • Smoke Alarms/Burglar Alarms/Sprinkler Systems: These types of safety systems, especially if hardwired to the police department or fire department, make your home less vulnerable to damage
  • Non-Smoker: If you are a non-smoker your risk of fire decreases, which can lead to lower rates
  • Dead Bolt Locks: Additional security helps to reduce burglaries and your premiums reflect this
  • Association/Alumni: Some companies offer discounts for graduates and members of select organizations

Calculate How Much Insurance You Need

You can also save money on your home insurance policy by not over-insuring your home. You should insure the cost to rebuild your home, but should not include the value of the land upon which it is built. Even if a home is totally destroyed by a fire, the land beneath it is still there. However, be careful when estimating the value of replacing your home. Newer, more stringent building codes may make it more expensive to rebuild than you realize.

Raise Your Deductible

A deductible is your out-of-pocket cost before the insurance company makes a payment on a claim. A higher deductible reduces your premiums in two ways:

  1. The insurance company pays out less money on each claim
  2. If you have to pay a portion of any claim, you are less likely to submit smaller, "nuisance" claims

If you do submit a claim, remember that you have to absorb part of the cost of repairs. So having some money set aside, such as an emergency fund, to meet such costs is a good idea.

In and Around Your Home: Thinking Ahead Can Keep Rates Low

Maintaining your home can result in affordable home insurance rates. A well-kept home is less likely to be damaged, which leads to fewer claims. Furthermore, those less frequent claims help to keep insurer's costs and your premium rates down.

Eliminating hazards from your home can also reduce rates. For example, getting rid of a trampoline, which has a high incidence of claim, could avoid a future claim and help you maintain low premiums. Make sure you don't have other potential hazards on your property as well, such as an unfenced swimming pool that may result in a future liability claim. By spotting and removing potential hazards in and around your home, you may be able to maintain low home insurance rates.

Additionally, modernizing your plumbing, heating or electrical system may get you a discount. But other updates, such as renovating your kitchen or bath, may increase the rebuilding cost of your home--and your insurance rates.

Other Considerations

Having a good credit score is viewed a plus, and can result in better rates. In addition to maintaining a good credit score, you should also make insurance payments on time.

You may also save money by paying your homeowners insurance premium annually or bi-annually. By making payments less frequently you can avoid service charges that may be tacked on if you pay premiums monthly.

Taking these steps doesn't eliminate the need for homeowners insurance, but at least you'll know you're doing what you can to maintain or get the best rates.

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