8 Ways to Lower Your Homeowners Insurance Premium
Increasing prices — from the grocery store to the gas pump — have many people looking for ways to save money. One expense you may be looking to cut down is your homeowners insurance.
Now, you can't eliminate your homeowners insurance completely as your mortgage company requires it, and you need financial protection in case you experience a major loss. However, you can find ways to lower your homeowners insurance premium to make this essential expense more affordable.
You can take several steps to lower your homeowners insurance premium. Try these options.
Your rates may be substantially lower with a different insurance company. If your rates have gone up recently or you feel you're paying too much, you can get free quotes from other insurers. Independent insurance agents can shop your coverage with several insurers, so they can give you multiple options at once for easy price comparisons. Other agents, such as State Farm, Allstate and American Family Insurance agents, only work with one carrier. You'll need to call agents for those companies to get quotes from each one.
You can also sometimes get better rates when you stay with the same insurer long-term. You'll often see discounts after being with the same company for several years. However, if the rates increase overall, you could still save money with another company.
Most insurance companies give you a small discount when you buy more than one type of insurance. A common discount is bundling your homeowners and auto insurance with the same insurer, but you can often get a discount by bundling more insurance policy types. Sometimes it's cheaper to have your policies with different companies, so look at all your options before bundling for a discount.
Many home insurance companies offer discounts for other reasons. This could include discounts for:
- Paying your yearly premium in full instead of in monthly payments
- Not having any claims
- Belonging to an HOA
- Being in the military
- Being retired
- Having a security system or other features that protect your home
Ask about discount options to lower your premiums.
Your deductible is the amount you pay before the insurance company pays its portion of a loss. If you have a $500 (CAD 670) deductible and a $4,500 (CAD 6,030) loss, you're responsible for $500 (CAD 670), and the insurance company will pay $4,000 (CAD 5,360). The lower your deductible, the higher your insurance premiums will be. If you raise your deductible, you should see a decrease in your premiums. Make sure you can comfortably afford the higher deductible if you have a claim.
More Related Articles:
- 7 Clauses to Look Out For in Your Homeowners Insurance Policy
- What’s a Deductible?
- Insurance Terms, What Is an Act of God?
- What Is an Insurance Premium?
- What’s the Difference Between Homeowners and Renters Insurance?
You can also decrease your premiums by lowering the amount of coverage you have. However, this can be a risky move. If you have a major loss and not enough coverage, you could face a financial crisis. Work with your insurance agent to calculate the proper coverage amount.
Your homeowners insurance costs are partially based on the features and condition of your home. Any improvements you make could earn you discounts that lower your homeowners insurance premiums. If you have an older home, you might retrofit it for better protection against earthquakes or hurricanes, depending on where you live. Updating your plumbing or electrical system can save you money on your insurance since you reduce the risk of water damage and electrical fires.
Adding certain security features, such as deadbolts and alarm systems, can also lower your rates. Before installing a system, check with your insurance company to see if it would qualify for a discount.
Many insurance companies use your credit score to help calculate your rates. Improving your credit score can save you money in some cases. This is a long-term strategy that pays off over time with your insurance premiums, as well as loan and credit card insurance rates.
You have your homeowners insurance to pay for covered damages, but filing a claim can increase your premiums. Sometimes, your insurance company won't renew your policy if you have several smaller claims or one large claim. If you have a minor loss that's about the same amount as your deductible, it could be worth it to skip the claim and pay for the repairs yourself. You'll spend about the same amount of money, but you won't have to worry about a jump in your insurance rates or a nonrenewal.
All CAD conversions are based on the exchange rate on the date of publication.
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