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Home insurance costs are rising. Supply chain issues due to the pandemic, labor shortages in the construction industry, rising inflation, and increasing natural disasters are contributing factors. And experts say this trend will continue.
However, you have ways to ensure you’re paying the lowest rate possible while remaining fully covered. Here are some tips to save on homeowners insurance.
Don’t drop coverage to save money
Dropping coverage to lower your premium may save you some cash in the short term. But if disaster strikes, you’ll be left footing the bill when it’s time to rebuild your home and replace lost belongings.
Home insurance protects you from paying out of pocket for expensive costs. “What you're insuring your home for is the cost to repair and rebuild,” says Carole Walker of Denver, executive director of the Rocky Mountain Insurance Information Association. “It is one of the most important financial investments you're going to make.”
You should also avoid dropping other necessary policies beyond homeowners insurance, such as a flood insurance policy from the National Flood Insurance Program. Instead, try getting quotes from private insurers. You may find a cheaper option.
Walker also recommends homeowners communicate regularly with their insurance agent or company. Provide as much detail as possible about your home and belongings to ensure you’re always fully covered.
Increase your deductible
Raising your deductible, the amount you pay when you file a claim, is a guaranteed way to lower your homeowners insurance premium. But only do this if you know you’ll have enough cash on hand to cover the higher amount if something happens.
If you’re unsure of whether to increase your deductible, consider how much you’d be comfortable paying in a situation where you might want to file a claim. For example, if your deductible is $1,000 but you could pay up to $2,500 out of pocket for home repairs or lost belongings before turning to your insurer, consider increasing your deductible to $2,500.
Ask about discounts
Most home insurers offer a variety of discounts, so ask your agent or insurer about any you might be missing out on.
“Bundling your policies is a great way to save,” Brian Pattillo of Westlake, Texas, vice president of strategy at Goosehead Insurance, wrote in an email. Some insurer websites state that homeowners who bundle auto and homeowners insurance can save 20% to 30%.
Depending on where you live and which insurer you have, discounts could also be available for:
Signing up for paperless billing and automatic payments.
Installing safety devices like deadbolts and security systems.
Having smoke detectors and fire extinguishers in your home.
Build your credit
Insurers use a credit-based insurance score to set rates in most states. Using credit to set homeowners, renters, condo and mobile home insurance prices is not allowed in California, Maryland and Massachusetts.
Because of this pricing model, a person with poor credit pays an average of 76% more for homeowners insurance than someone with good credit in most states, according to NerdWallet’s 2022 analysis of home insurance rates from Quadrant Information Services.
You can build your credit by making consistent on-time payments and keeping your credit utilization ratio under 30%.
Avoid filing small claims
Home insurance premiums typically increase after a claim, so avoid filing small claims if you can.
For example, say a storm causes a tree branch to crash through your living room window. The cost to repair the window is $1,300, while your insurance deductible is $1,000. If you file a claim, your insurer will pay out $300, but your insurance premium will likely increase. If you can afford this amount, skip the claims process and pay for the repairs yourself.
“Save those homeowners insurance claims for larger unexpected, sudden losses,” Walker says.
Take steps to protect your property
You can typically save on homeowners insurance by safeguarding your home from certain threats.
Natural disasters can cause extensive home damage, so if you’re at risk, take steps to protect your home. For example, if you live in a wildfire-prone area, you should remove anything flammable within 100 feet of the house and box-in the eaves with nonflammable materials. If your home is susceptible to high winds, installing wind-resistant windows can decrease the damage from hurricanes.
You may also lower your premium if you protect your home from theft. Some insurers offer discounts for installing qualified security systems and other protective devices like deadbolts. If you make home upgrades, let your insurer or agent know.
Shopping around and comparing home insurance quotes from multiple companies is the best way to find the cheapest rate.
Insurance comparison sites can streamline the shopping process, but you can also get quotes directly from insurance companies on their websites.
Or, if you want to save time, work with an independent agent.
“An independent agent can provide multiple quotes from a variety of insurance providers all at the same time, providing an unbiased opinion,” Pattillo wrote in an email.