When buying homeowners insurance, the cost will typically depend on the amount of coverage you need and how high your deductible is. Here are 10 things that could help reduce the cost of your premiums.
1. Check out options
Talk to a number of insurers to see what services they provide and current customers of any you are considering. Check the financial stability of the companies you are considering with rating companies such as A.M. Best and Standard & Poor’s.
Go online to insurance quote services to get ranges, but don’t make a decision based solely on price. When you’ve narrowed your choices to three, ask for quotes.
2. Raise your deductible
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums.
Most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent.
3. Eliminate the cost of the land in determining the price to rebuild
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowner’s policy. So don't include its value in deciding how much homeowner’s insurance to buy. If you do, you will pay a higher premium than you should.
4. Buy your home and auto policies from the same insurer
Many companies will give you a better price if you buy homeowners, auto and liability coverage from them. If they offer this discount, be sure that it’s lower than buying the different coverages from different companies.
5. Make your home more disaster resistant
Find out from your insurance advisor or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters and how much each action will save you.
Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history on the property.
6. Improve your home security
You may pay more if your home does not have smoke detectors, burglar alarms or dead-bolt locks. An automatic sprinkler system for fires and a burglar alarm connected to a security company by phone will get you even more savings.
7. Ask about discounts for policy holders 55 years of age or older
Retired people who stay at home may get a better price because they are less likely to be burglarized and may spot fires sooner, too. Retired people typically have more time for maintaining their homes.
8. Maintain a good credit record
Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowner’s insurance policies. In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied.
9. Review the limits in your policy and the value of your possessions at least once a year
Most policies only cover up to a certain amount of personal property like jewelry and artwork. If you have a rider on your policy to cover items beyond the limit, be sure you review annually. You may have purchased new items that need coverage. Or you may no longer need coverage of a particular item. Also check the value of the covered items to see if the value has changed. All will help you manage these costs.
10. When you’re buying a home, consider the cost of homeowner’s insurance
You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home’s electrical, heating and plumbing systems are less than 10 years old.