While home insurance may be one of your biggest monthly expenses, a good policy will offer you a safety net you can depend on. Be sure to invest time into customizing the best policy for your needs and budget.
A home will likely be the greatest investment you make in your life, so it’s essential to protect yours with a comprehensive insurance policy that offers you not only peace of mind but also actual financial coverage in the event of a “peril.” This term refers to fires, storm damage, vandalism, theft, and other incidents that can cause damage to your home, property, or self. In the event of such peril, a good insurance plan’s reimbursements may actually save you more money than you invest in it.
However, protecting your home and family requires selecting a policy that’s suitable for your budget. According to Bankrate, Americans can expect to pay $1,428 per year on average for home insurance, though living in a higher-end home or a region prone to severe weather can make these costs higher.
Thankfully, it’s possible to make good home insurance coverage affordable. Many people end up overpaying because they opt into the first insurer they find online or fail to tweak the components that influence the premium—the monthly rate you pay for holding an insurance plan. They also may not know of other potential savings, like reporting home improvements to their insurer. But with a little extra effort, you can make sure your policy is suitable for what you need.
Follow this guide to optimize your home insurance coverage and save money, all without excluding necessary coverage areas.
Customize Your Policy
Because home insurance policies are designed to cover a wide range of incidents and expenses, designing a policy can be intimidating. The kind of coverage that’s right for you depends on a great number of factors, including the cost of your home, the value of possessions like electronics and jewelry, where your home is located, climate conditions in your region, and even features like the geographic slope of your property. Insurers need a breadth of information to understand your liability risk, or the possibility of incidents like weather-related home damage and theft, so they can calculate an appropriate price based on said risk.
After determining your risk and evaluating the features of your property, a home insurer will propose a certain premium rate. However, you don’t have to agree to this initial offer. Accepting the default policy would be as unwise as accepting the first home your real estate agent shows you; you might get some features that you want, but you could also end up with ones you don’t. Therefore, your first step toward saving money on home insurance is to review your plan in detail.
Raise your deductible.
When you initially enroll in an insurance policy, your insurer may default you to a midrange deductible. This is the amount you must pay out of pocket before your insurer takes over when you file a claim for home repairs or to cover other losses. Say that you have a plan with a $1,000 deductible. If vandals break some windows in your home and the cost to repair them is $5,000, you'd be responsible for $1,000, and your insurer would cut you a check for the remaining $4,000 (with some possible exceptions, including coinsurance percentages). This cost-sharing scenario will typically happen every time you file a claim.
However, your deductible rate is nearly always flexible, and plans with higher deductibles usually have lower premium costs. In fact, Nerdwallet estimates that homeowners could save about 12 percent per year by increasing their deductible from $1,000 to $2,500. Just be prepared to pay more in the event you have to file a claim; for this reason, it’s wise to keep the amount of your deductible in savings whenever possible.
Avoid paying for unnecessary coverage.
There is absolutely no such thing as one-size-fits-all home insurance. You should always customize your policy to cover only the features you need and exclude what you don’t.
For example, many people may not know that their policy could be including coverage for medical payments to others, additional living expenses, and even circumstances like a total explosion or nuclear accident. If you feel these extra bits of coverage are unnecessary or would prefer to change the amount of liability your plan covers, omitting them can save you money.
Also, note that you do not need to purchase coverage equal to your home’s market value, as this value actually includes the cost of the land your home occupies. Even in the event of a serious weather catastrophe, the land itself should remain intact, so there may be no need to cover its full cost.
Consider little-known discounts.
Did you know that an insurer may offer discounts simply for customizing your payment type? Enrolling in paperless billing and paying your premium via automatic bank transfer can potentially reduce your monthly bill.
You can also earn savings when you move into a newly constructed house, which an insurer will perceive as lower risk than an older one. Other possible savings include being a nonsmoker and even working in a specific industry, including education, engineering, or fire safety.
Bundle and save.
Finally, consider the potential savings when you bundle your home insurance with another type of policy, such as auto or life insurance. Most insurance companies will gladly offer you a discount for purchasing their other products. Speak to an insurance representative about bundling with other policies; they will be happy to help you enroll.
Optimize Your Home
As insurance is designed to cover potential damage, your premium is based on a certain liability risk. Consider investing in your home to reduce your perceived risk and, in turn, save money on your plan.
Invest in smart technology.
A smart-home assistant can offer superior risk detection, especially if you sync it with other technology like leak detectors, front door monitors, and burglar alarms. Advancing your fire and theft safety alone can save you up to 20 percent on your premium.
Safeguard your property.
Smoke and carbon monoxide detectors provide a basic level of protection, but having them can still save you money. For additional security and the possibility of greater savings, upgrade to more comprehensive air-quality monitors that can identify other airborne toxins like mold, radon, and volatile organic compounds (VOCs).
Make home improvements.
A more resilient home is a cheaper home to insure. Invest in features like storm shutters, impact-resistant roofing, and leak-resistant plumbing to be eligible for additional discounts. As pricey as these features may seem to be, the ensuing savings could offer a net positive for your living costs for several months or even years.
Whatever upgrades you make, be sure to report each one to your insurer. Make it a habit to contact them any time you make changes; you never know which ones could lead to additional savings.
Be Fiscally Responsible
Believe it or not, your financial habits can actually influence your home insurance premiums! Here are a few ways to increase your fiscal responsibility in the eyes of an insurer and potentially decrease your premium costs.
Avoid filing minor claims.
Submitting a claim doesn’t just trigger your deductible. It can also contribute to a spike in your insurance costs. For example, filing a claim for wind-related damage can increase your premium rate by as much as 9 percent. This means that you could actually save money by making minor repairs and replacements out of pocket—and not reporting the incident to your insurer.
Most claims only stay on your record for about five years, so the consequences of filing a necessary claim may resolve after that time. However, because five years of increased monthly premiums can add up to thousands of dollars in extra costs, you should still weigh your options before you file.
Improve your credit.
Your credit score affects just about every facet of your life, from employment to homeownership, and your insurance policies are no exception. If your credit score is below 630, which is generally considered “low,” you could be paying much higher rates than those with better ratings. Check your credit score for any possible errors or fraud, and then look for ways to improve it.
Options for building your credit score include consistently paying bills on time, reducing debts, and limiting the amount you borrow via credit cards and short-term loans. Improve your score, and you can avail yourself to more affordable home insurance coverage.
Get Assistance
Ultimately, to get significant savings on home insurance costs, you may need to find a new policy. To do so, reach out to a qualified broker or agent, who can help you enroll in a policy quickly and easily. These specialists are experienced in the terms, conditions, and exclusions that can make the insurance-hunting process tedious and complicated for homeowners.
A broker will work hard to match you with an insurer and plan that suit your needs and budget. Even better, they can assist with hard-to-enroll policies and coverage types. For example, people who live in flood-prone regions of the nation may have trouble finding an insurer who will cover flood damage at an affordable rate. An insurance broker will protect your interests and get you the coverage you need so you aren’t left paying unreasonable costs out of pocket.
Additionally, they can help you identify what kind of coverage is right for you based on your homeownership type, whether it’s an HO-6 policy for a condominium or an HO-8 plan for an older home. This is just one of the many complications that can make shopping for a policy by yourself potentially prohibitive and costly in the end.
To start searching for affordable coverage for your most pressing home insurance needs, reach out to a licensed insurance agent or broker. They will help you safeguard your home, your family, and your finances from a variety of risks.