Saving money on your homeowners insurance might not be as hard as you think. Here are some simple tips that you can use to cut your rate by as much as half.
Raise Your Deductible
This is the easiest way to lower your homeowner’s insurance premium, but it comes with a risk. If you raise it too high, you could be in trouble if there is a claim and you can not come up with your out of pocket deductible. If you go this route, make sure that you have enough money in your emergency savings to cover your deductible, if needed.
So, how much can you save by raising your deductible? The amount can be substantial, but it will vary by carrier. That being said, with a max deductible, you could cut your premium in half over the typical 1000 dollars deductible. There are limits however, and your mortgage holder might have some problems with a deductible that is too high.
Before you make any policy changes, be sure to consult with your lender to avoid getting yourself in any mortgage trouble.
Get Multiple Quotes
Insurance companies set their premiums based on risk. They look at past losses and set rates to limit future loss and partially to recover past ones. Not all companies have experienced the same losses however, which is one reason rates vary so much.
What that means to you is that rates can differ substantially, because they are based on a companies personal losses. That means that you might find one company charging a 2000 dollar a year premium and another one charging a 4000 dollar premium, for the exact same coverage.
If you want to save as much as 50 percent on your homeowner’s premium, be sure to shop that policy around. Get quotes from 3 different insurance companies at a minimum, even better would be to get at least 6. You will be amazed at the premium differences.
Having said all of that, the cheapest carrier might not be the one that you should select. This is your home, so you also want an insurer with a solid reputation. Far too many people have had to sue their insurer to collect a payoff, so be sure to take reviews into consideration along with cost.
Bundle Policies
Insurance companies always want you to bundle and save and for many it actually works.
In any case, all it costs is time to find out, so when you are calling multiple companies for quotes, ask about bundling. The most common policies to combine will be homeowner’s, auto and possibly life insurance.
With a little luck, you could save 10 to 20 percent on all of your policies by bundling them, but make sure that you do the math. You don’t want to save 500 dollars on your homeowner’s policy, only to end up paying 800 dollars more on your auto insurance premium.
Sometimes it pays to bundle, but other times it is best to push individual policies towards the lowest bidders.
Get A New Roof
One of the biggest factors in deciding how much your homeowner’s premium will be is the age of the roof. Over the years, insurers have lost billions replacing roofs, much of that from unscrupulous roofing companies. They are starting to crack down.
Obviously, paying 10,000 dollars to replace a roof does not seem like a smart way to save a few thousands of dollars on insurance premiums, but it might be. If you know that you need a roof, you can no longer count on it automatically being paid for with an insurance claim.
So, you may want to consider pulling the trigger on that new roof and taking the insurance premium discounts as a way to offset some of the cost involved.
Note Safety Features
One last way to save money is to note the safety features of your home. There are dozens of discounts that an insurer can give you, and they all revolve around risk. Limit that risk and you could save money.
One safety feature to note is the proximity to a fire station or simply a hydrant, especially if you are in a rural area. The closer you are to a station or hydrant, the less likely your home would be a total loss if it were to catch fire.
Another option is to get a monitored alarm system. A monitored alarm will reduce the risk to an insurer, especially if fire alarms are monitored. With someone there to call in first responders, your house is once again less likely to be a total loss if it were to catch.
If you are not sure about what kind of discounts are out there, call your agent and ask for some guidance. If they want to retain your business, they will be more than willing to help.
Realizing Your Savings
Of course, all of these savings will not be immediate. If you have a home loan, your insurance premium cost is most likely paid for with your escrow account. That means that you will not see any savings from a premium reduction until your next escrow adjustment.
Every year, your escrow contribution will be re-evaluated. This is due to the ever changing costs associated with your home. Property taxes and other expenses, such as insurance are always changing, so your payment will need to be adjusted.
In this case, you will have a reduction in your insurance premium and every 1200 dollars that you save will result in a 100 dollar a month reduction in your eventual escrow payment.
