7 Ways to Lower your Homeowner's Insurance Premiums

7 Ways to Lower your Homeowner's Insurance Premiums

Insurance is necessary to ensure you're covered in the event of a large, unexpected expense. No one plans for an outdated pipe to burst and flood their homes, and the costs associated with a repair of that magnitude isn't an amount people usually have tucked away. Unfortunately, premiums can be so high that the monthly expense is too draining to bear. Rather than cancelling your policy and leaving yourself open to high dollar emergency expenses, you should look at ways to lower your homeowner's insurance premiums instead. There are many ways to do this, starting with shopping for the right policy to begin with.

1. Get competitive quotes from different insurance companies and bundle your policies when you can.

If you recently purchased a home and are required by your mortgage lender to purchase a homeowner's insurance policy, they may give you the name of a preferred vendor they do business with regularly. While this suggestion may help you get started, it's a good idea to keep in mind that they can't actually force you to use a specific insurance company.

There are many ways to shop around and compare quotes. Search online websites that will help you make quick comparisons, such as www.insure.com or www.policygenius.com. You can also look at the insurance company you already use through your employer, or contact a local credit union to see if they have any rates they can offer at a discount. Ask about bundling policies to receive even bigger discounts, especially if you have a claim free history with your current insurance company. For example, if you already have an excellent car insurance company that you've been with for a while without a claims history, they may be able to bundle your homeowner's insurance at a lower rate than if you were to start somewhere new with a different company that you had no history with.

It's a good idea to reach out to at least three to four different companies and compare their rates before finally settling on a policy. You should also be sure to check whether or not that company receives a lot of complaints by its policyholders. Talk to neighbors in the neighborhood and ask them about their recommendations as well.

2. Check with other insurance companies every couple of years.

If you've had your insurance policy for a while now and it's been a while since you've spoken with your insurance agent, give them a call. Talk about what your insurance is currently covering, and consider carefully if there are areas in which you can make some adjustments. Look at your declarations page and the exclusions page to see what your policy covers and what it does not cover. Small adjustments here and there can make a big difference. You may be paying for coverage you don't need. Once you've made sure your coverage is the way you like it, ask if you're qualified for any new discounts. Then, check around with other companies again to see if they have any other discounts or programs with the same coverage you're already receiving. Do this every few years just to make sure you're getting the lowest possible premium.

3. Increase your deductible.

This may sound like it's counterintuitive, but increasing your deductible can drastically lower your premium. If you have a higher deductible, you'll pay more up front and out of pocket whenever you file a claim, but that may be worth it to you in the long run if it lowers your monthly costs. If you can increase your out of pocket deductible by just $500 you can lower your premium by nearly 20 percent in some cases. Make sure you do not raise your deductible to a number that you can't afford should an incident happen. If it's higher than you can pay out of pocket, you won't be able to reach that amount if an incident does happen, and you're left in a bad situation. Increasing your deductible can lower your premiums, but it's a good idea to consult with your insurance agent to make sure it makes financial sense for you in the long run.

4. Make improvements to the home, including the home's security.

Little improvements to your home can make a huge difference to your homeowner's insurance premiums. Simple improvements, such as adding storm shutters if you live in areas where storms are prevalent, can have an affect on your policy. If you live in a neighborhood that is known for break-ins and vandalisms, get a security system or install a security gate around your property. You can add deadbolts to your doors, install smoke alarms and detectors in every room of the house, ensure your electrical systems are up to code, install home sprinkler systems, purchase and store fire extinguishers in the kitchen, buy shatterproof windows, get motion detectors or glass breaking detectors, install strong shingles on your roof, replace the garage door often; the list goes on and on. These additions or improvements to your home lower your home's risk of major damage in the case of an accident. If you already have homeowner's insurance and have made improvements to your home, show proof of these improvements to your insurance agent. This may have an affect on your policy and ultimately your premiums may go down.

5. Understand what claims do to your premiums, and avoid making unnecessary claims.

You keep an insurance policy for a reason. If there's an accident and serious damages are made to your home, you need to be able to repair them without going bankrupt. However, you should not use your policy to cover or repair anything you can fix on your own without breaking the bank. The more claims you make, the higher risk you are to the insurance company as a policyholder. In some cases, too many claims can even lead to cancellation of your policy. If a window breaks because someone was playing baseball a little too close to your house, it doesn't make sense to call your insurance company and risk raising your premium when a local repair shop can fix it for around $200 to $500. You want to keep your premiums low, and lean on your policy in the event of damages that you wouldn't be able to repair out of pocket.

6. Keep an eye on your credit and keep it clean.

Keeping a good credit history can have a major impact on your insurance premiums and the cost of your overall policy. If you have good credit, you tell insurers that you can be trusted. Most insurers actually use your credit score and history in the process of quoting you for your policy to begin with. If you want to ensure your credit history stays squeaky clean, pay your bills on time, keep your credit card balances low, and fix or dispute any errors as quickly as possible. An app, such as Credit Karma, is a good place to start. It allows you quick access to your credit score and alerts you to any major changes.

7. Make your payments on time and in full.

Another way to save on your insurance premium is to consider paying the entire policy up front at the beginning of your billing cycle. In some cases, this can be cheaper than paying monthly. If you don't want to pay for it all up front, making sure that you complete your payments on time is another way to ensure those premiums stay low and affordable. If you ever think you might miss a payment date, or need extra time, speak to your insurance agent and let them know the situation. This can avoid penalties and additional fees.