Facebook
X
Pinterest
Copy Link
It’s a hard reality to face when you realize you can’t afford a house because the homeowner’s insurance is too high. Likewise, if you already own a home, discovering that your insurance is about to triple can send you into a cold sweat. Instead of resigning yourself to the idea that homeownership isn’t for you, see if you can save money on your homeowner’s insurance.
Do You Have to Get Homeowners Insurance?
If you plan to get a mortgage, your lender requires you to carry insurance on your property. Typically, this isn’t a big deal because your home is a huge investment, and you naturally want to protect your asset. The cost of coverage gets rolled into your monthly mortgage payment via your escrow account.
However, nowadays, insurance prices are through the roof, and rising costs can make it impossible to buy a home. In some areas of the US, companies aren’t even writing new policies anymore, making it extra challenging to find reasonable rates. In these cases, you’ll need to pursue alternate ways to get insurance coverage.
However, let’s assume your home qualifies for insurance through a traditional insurance company. The problem is that it’s expensive, so you need to figure out a way to tighten your budget a bit.
Tips for Saving Money on Homeowners Insurance
Before you assume you can’t buy a house, or you need to sell your home, try these tips for saving money on your homeowner’s insurance.
1. Shop Around for Insurance
Don’t go with the first company that quotes you. Pricing typically varies between different insurance companies depending on several factors.
Shop around to see which companies offer the most competitive pricing. Ask people you trust for recommendations, then get quotes from at least three insurance companies.
You don’t necessarily want to choose the cheapest option. Before you make a choice, check out the company’s rating on a site like AMBest to make sure their financials are in good shape. Also, consider how you feel about their customer service and look at reviews.
2. Go With a Higher Deductible
Typically, the higher your deductible, the lower your premium. The deductible is the amount you need to pay out of pocket before your insurance company starts footing the bill for repairs.
Talk with your agent about how raising your deductible will affect your premiums. If you live in an area that requires you to have separate coverage for things like earthquakes or wind and hail, you likely have multiple deductibles.
If you decide to increase your deductible, set money aside in a high-yield savings account. Try to save the amount of your deductible so you’re not left in the lurch in an emergency.
3. Bundle Your Insurance
Whenever possible, buy your homeowner’s and auto insurance policies from the same company. Most companies provide discounts for customers that bundle products. You’ll get a discount on both policies and may even have the option for more if you’re in the market for a term-life policy or other coverage.
4. Review Your Dwelling Coverage
Check your paperwork and review the amount your policy has for dwelling. Many people think this number needs to be the amount they paid for their home. However, this amount should be the cost of rebuilding your house. Therefore, don’t count the value of your land in this amount.
5. Add Protection to Your House
Your insurance company is likely to offer discounts on wind mitigation measures, like a new roof and hurricane-resistant window coverings. These additions could save you up to 30% on your premium.
A monitored security system is another feature that usually provides a deep discount. Some companies also offer a discount the closer you are to a fire station, so check to see where your nearest firehouse is.
6. Review Your Policy Every Year
Always look over your coverage annually to ensure you’re getting every discount you’re eligible for, and you have enough coverage. If the amount of your personal property has decreased, reduce your coverage and vice versa. You want to save money on your insurance, but you don’t want to be stuck with not enough when you need it.
7. Always Ask About Discounts
Things change, so don’t be shy about asking for discounts. Ask your agent each year at renewal what discounts you are eligible for and if there are any new options.
8. Ask Your Agent to Recheck Your Credit Score (If It’s Gone Up)
If you know your credit score has gone up since you first got your homeowner’s policy, ask your agent to recheck your credit. Your credit score is one factor many companies use to determine your premiums.
If this is the case with your insurance company, finding you have a higher score could get you an instant decrease in your premium. However, you only do this if you are 100% certain your score has increased, otherwise, it can backfire. If your score is actually lower, your premiums could go up.
Check out our blog, Homeownership: Beyond the Mortgage!
Learn more Tips & Tricks for your journey, here!
