Your home is your castle. But just like a castle, you want there to be protection in case something goes wrong. This is why you absolutely need to get home owners insurance.
However, just like all other insurance products, the costs of home owners insurance can vary significantly from place to place. Each one has different criteria and weighs the value of each element differently.
Fortunately, to get the best price for home owners insurance, there are a number of easy steps you can take. Most of these things are completely within your control and will have a big impact on your savings.
Here are my 21 tips for reducing your home owners premiums.
1- Shop around for the best price.
These days, no one is limited to just their local insurance agents. The Internet makes it very easy to find the names of dozens of reputable insurance companies. All you need to do is investigate them, make sure they are a good insurance company to work with, and then get a quote.
I always recommend getting at least 3 quotes. Usually this can be done by filling out a simple online form or speaking with an agent on the phone.
2- Check into a multi-policy discount.
Often your best bet for getting the best price for home owners insurance is to bundle it with your auto insurance or life insurance policy. Insurance companies love to sell as many products as possible, and they will often give you a significant discount if you buy more than one. The discounts are often 10-20% less. Use that to your advantage!
3- Pay in one lump sum.
Another way insurance companies will give you a nice discount is if you opt to pay the whole premium in one lump sum. This is opposed to breaking it up into several smaller payments. If you pay for your coverage out of pocket instead of by mortgage escrow, then perhaps consider it.
4- Increase your deductible.
Your deductible is the amount of money you are willing to pay out of pocket in case something goes wrong. While most insurance companies will default you to $500 or $1,000, consider setting it to 2 percent of your home value. This will help substantially lower your payments.
5- Replacement cost is different from home value.
When getting your quotes, you might find that they try to insure you for more than you paid for the house. Remember to differentiate between what you paid for the house and what it would cost to rebuild it if something happens. There is a difference.
6- Don’t include the value of your land in the rebuilding cost.
One thing that can help you in your insurance cost is that you can subtract the cost of the land. Think of it this way: If your house burns down, the land will still be there.
7- Make sure your credit score is looking good.
Ahh … your credit score haunts you again! To get the best insurance price, make sure your credit score is in good shape and as high as possible.
8- Pick a home with an attached garage.
When searching for your home, try to get one with an attached garage. Typically insurance costs are less because detached garages are treated as their own unique structure.
9- Report your roof and furnace upgrades.
If you recently upgraded the roof or furnace, remember to tell the insurance company. Your rates will likely go down. An upgraded roof means less leaks, and a newer furnace will mean less chance of a fire.
10- Avoid having liabilities like a pool or fireplace.
Swimming pools and fireplaces can make a house look very nice! But in the eyes of the insurance company, they are huge liabilities for people getting hurt and setting the house on fire.
11- Lose the trampoline.
Even though they can be fun, trampolines can be a huge liability for homeowners. Skip buying one for your children’s next birthday or Christmas, and you’ll save on your insurance cost. Let them find a friend who has one instead – LOL!
12- Get a home security system.
Security systems will not only help you potentially catch the bad guys, but you’ll get another discount on your policy. This is because sometimes simply having the security system will be a deterrent to crooks. With WiFi, the costs of many surveillance systems has decreased significantly over the years. This is because they can work off your Internet connection and don’t require hard wires.
13- Reinforce your home.
If you live in an area with lots of storms, try reinforcing different parts of your home such as the roof, walls, or garage door. To an insurance company, the more protected you are, the less of a potential that they will have to pay. That means savings for you.
14- Protect from floods.
If you live in a high flood area, take provisions to keep water from entering your home. This could be by adding a levee or digging ditches. Again, the better protected you are, the lower your rates will be.
15- Knock down old structures.
If there are old structures on your property that you no longer use (like an old shed or barn), remove them. To an insurance company, they are liabilities for people to get hurt.
16- “Good dog!”
When selecting a family pet, make sure it’s a family friendly breed. Insurance companies may raise your rates if you select a more aggressive breed.
17- Live close to emergency services.
When picking your house, try to get one as close as possible to emergency services like fire and police. This may entitle you to a discount.
18- Payoff your mortgage.
As if you need another reason to payoff your mortgage quicker, your homeowners insurance will be cheaper if you outright own your house.
19- Regularly review the limits on your policy.
If your needs change over time, be sure to make adjustments that can help shave down the costs.
20- Stick to the same insurer.
To keep customers longer, often they will reduce their rates or be more inclined to negotiate a lower cost.
21- Pick and choose when you make a claim.
Once you make one, your premiums can go up. So decide ahead of time if the damage really needs reported or not. In order to keep getting the best price for home owners insurance, it may be best to just handle the repair yourself. You’ll have to weigh both sides.
Featured image courtesy of Flickr
These are all good tips. Probably the best way to save money and have excess coverage is to get a multi-policy, auto and home. Just carry the minimum required insurance for both and then add an Umbrella policy over them. A $1M Umbrella can be as low as $150 a year.
Some of these do depend on your insurer! For example, I thought having a home security system would decrease our cost, too. I asked my insurer before I installed it and they said a security system would *increase* my cost to insure. Apparently it’s a liability if it’s installed incorrectly and it’s just another system to insure in the overall cost of your house.
So sometimes it’s best to check with your insurer before you do these seemingly common-sense things–it could actually increase your insurance costs.