Getting the cheap homeowners insurance is not as difficult as you might think. With a little forethought and planning you can get a great deal. Here are some simple tips you can use to help you get the most coverage at the lowest price from any company you choose. If you’re renting, see our guide to getting cheap renters insurance.
- Compare Insurance Quotes from Multiple CompaniesShopping around for the best policy and the cheapest rates can save you a great deal of money on your homeowners insurance. Keep in mind that the policy details change from one company to another, and beware low premiums that are the result of reduced coverage. You should consider reviewing homeowners insurance rates at least once each year, but every 6 months is better and also after any major life event such as getting married or after making any major home renovation. After getting some rates from different insurers, take a look at their financial ratings and read insurance reviews to get a better overall view of how the company will be when you need them most.
- Review Your PolicyAs mentioned above, you should review your policy at least once a year. Over the course of a year, many changes can take place. You may have switched jobs, the value of your home may have changed, the value of your possessions may have changed or you may have purchased more valuables. Reviewing your policy to ensure you’ve selected the right amount of coverage can help you find ways to save money.
- Ensure You Have the Right Amount of CoverageThe amount you paid for your home is not the same as what it would cost to rebuild your home in the event of a catastrophe. Also, the land that your home sits on doesn’t have any risk of being burned down or stolen. When deciding on the amount of coverage you need, be sure that you’re only including the actual value of your home.
- Ensure You Have the Right Policy
Not all home insurance policies provide the same coverage, especially if they are through different companies. Carefully read through the policy coverage, terms and exclusions. It’s possible that there is coverage you don’t need which can save you money up front or coverage not included that you should add which can save you money if you ever need to make a claim.
- Increase Your DeductiblesThe deductible is the amount of money you have to pay out of pocket before the insurance policy goes into effect. The higher your deductibles, the cheaper your insurance rates will be, and vice versa. Be careful not to make your deductible so high that you cannot afford to pay them, but keep them as high as your household budget will allow. Raising your deductible to $1,000 could save you as much as 25%. You should also double check your policy to see if you have multiple deductibles. Some areas that are more prone to disasters may have another deductible for a specific disaster.
- Limit Your Claims
Insurance provides coverage for when you need it, but often times, submitting a claim increases your risk in the eyes of your insurance company and they will raise your premiums. Submitting multiple claims can even result in your policy being cancelled. When deciding whether or not to submit a claim, consider the long term costs alongside the immediate costs and benefits.
- Make Your Home Disaster ReadyDepending on the state you live in, you will be more prone to experiencing certain natural disasters more than others. Earthquakes, hurricanes or even thunderstorms can cause severe damage to your home that could end up having you file a large insurance claim. Whether you risk damage from winter storms, wildfires or one of many other disasters, adding storm shutters, reinforcing your roof or other items specific to your location, you can save on your insurance costs.
- Maintain a Good Credit ScoreYour credit score is going to be an important factor in determining your home insurance rates. Establishing and maintaining a good credit history can help cut your insurance costs. Before you apply for coverage, check your credit score and make sure that it is up to date and free of errors since more insurers have begun to use your credit score to calculate your homeowners insurance quotes. If you currently have a poor or bad credit score, look at ways to increase your credit score and then reapply for coverage or speak with your agent to see if you qualify for a discount.
- Increase Your Home’s SecurityThe more protected your home is from burglars, fires and other related claim events can save you between 5-20%. Installing deadbolts and a home security system greatly reduces the risk of vandalism and theft. Insurance companies will offer you even lower rates if your home is protected by a system that includes off-site monitoring. Installing smoke detectors or a sophisticated system including sprinklers and automatic fire/policy department notification can help reduce rates by as much as 15-20%. Not only will your home be safe for you and your family, you’ll also see more money in your pocket.
- Fun Addons Can Add Up
Features that add more fun to your life such as a pool, hot tub, trampoline or even a deck can each increase your costs. Some add to your home’s value, but others are considered a potential safety hazard. When considering adding a feature to your existing home or shopping for a new home, be aware of these various home features and their impact on your rates.
- Quit SmokingSmoking is dangerous to more than your health. For home insurance, smoking greatly increases the chances of a house fire, and that means your rates will be higher if you smoke. While not all insurance companies take your smoker status into consideration, you can get better rates from the ones that do if you quit.
- Multi-Policy DiscountsThe odds of more than one insurance policy having a claim filed at the same time is very low, so the more policies you have with the same company, the less risk you actually pose. If you can find a suitable policy with the same company that insures your car or provides you with life insurance, you can save money by receiving across the board discounts. Ask your agent if they offer other policies that can be bundled together at a lower cost than your currently paying.
- Insure Unique or Valuable Items Separately
If you own expensive jewelry, such as an egagement ring, fine art or collectibles, you may need to add a rider to your current policy for them to be covered. You may also want to request quotes from a specialty insurer to see if they can either offer better rates or better coverage for these valuables.
- Look for Other DiscountsDifferent insurance companies offer different types of discounts that can help you get cheap home insurance. Some may offer discounts for being a member of AAA while others give discounts to seniors who are AARP members. You may also get discounts for being part of a specific occupational organization, through your homeowners association or for other reasons. Speak with your insurance agent to see what discounts they offer to see if you can qualify for them.
- Be a Loyal CustomerWhile switching companies can offer you better rates, some insurance companies reward customer loyalty by providing higher discounts the longer you are insured with them. Some offer 5% while others may offer up to 10-15% for customers who stick around for 3-5 years with the same company.
- Pay Your Bill Early and Use Auto Pay
Many insurance companies charge less if you pay the entire billing cycle in full rather than making monthly payments. You can save 5-10% by paying early. Also, setting up automatic payments will ensure your policy does not lapse or that you’ll be charged any late fees.
- Be Aware of a Pet’s Impact
Dog owners are usually affected the most when it comes to increased costs, but other dangerous animals or furry pets that can increase repair and home maintenance costs can impact your policy.
- Ditch the Government Sponsored PlanGetting insurance if you are classified as a high risk may limit your options to only a policy sponsored by the government. If you’re currently on one of these types of plans, you should look into getting cheaper home insurance from a private insurer that may also offer better protection.
- Consider Homeowners Insurance When Buying a New HomeMany people don’t think about the cost of insuring a home when evaluating a purchase. There are a number of home specific factors that can affect your rates that should be taken into account. If you’re in a flood prone area, you may find it difficult to get coverage or may need to buy a separate flood insurance policy. Homes that are old probably also have old wiring and other features that will increase premiums. If you want to get more information about the claim history of a certain property, research its CLUE report which can help you examine the type of issues you may expect with the home.
- Reduce Your Flood Risk
If your house is located in an area with a high risk of flooding, you can still take steps to lower your costs such as elevating your utilities above ground, installing flood vents to minimize damage during a flood or even elevate your entire house if the risk is great enough.
- Remove Old Structures from Your Property
Old structures can be unsightly but also can be at risk of collapsing. Even if you own vacant land, but there is an old, unused barn or shed on it, your liability, and premiums, will be higher.
- Your Land Doesn’t Need Protection
Often, the value of your land is included when calculating your rates. The actual home and its contents are usually more important to protect instead of the actual land they are on. Removing the value of your land can help reduce your home coverage cost, but you should discuss this with your insurance agent in order to fully understand the risks.
Factors to Consider Beyond Price
While the above can help you get the cheapest homeowners insurance quotes, you may also want to consider additional factors when shopping for home insurance. Insurance companies use different policy forms and endorsements. The wording can be extremely different from one company to another so you need to look at what coverage and limits each insurance company is offering. It’s good to compare prices to make sure you are getting an affordable insurance, but price shouldn’t be the only factor you consider. Many times a cheaper insurance may not provide the same benefits of a policy you will need for your particular home in the area where you live. Your home is usually the most valuable asset you will own during your lifetime and you should consider several factors besides just price when shopping for homeowners insurance.
Review the Company its Financial Stability
To find a good homeowners insurance company, you should visit your state’s Department of Insurance website. There you can find which companies have the proper licenses to sell homeowner’s insurance in your state and don’t have any serious claims made against them. The website will give you details about the financial stability on all the insurance companies licensed in the state, any complaints against any of the companies, and may also provide average costs of policies in your area. This information will give you an idea of which insurance carriers you should reach out to for a quote.
Each company will have a score on the website that is given to them by a few different credit agencies like the AM Best, Standard & Poors and possibly others. These credit agencies keep track of the insurance companies by getting feedback from their customers, reviewing the carrier’s financials, knowing how claims are processed and other details.
Many of these credit agencies will also give each insurance carrier a rating on their financial health. This financial rating provides background into whether or not the company is sound enough to pay out policies in case you need to file a claim.
When there is a large loss to many different homeowners, reimbursement from your insurer may put your family in a financial disadvantage. Some insurance companies will outsource the handling of claims.
The entire point of insurance is to financially protect you in the event of a major disaster or to help you pay for damages resulting from damage to your home. Before you sign up with an insurance company, check if a licensed adjuster from the insurance company will handle your claim, or if they outsource claim handling to a third-party. While a third party party may not always be worse than a carrier handling the claim themselves, it may mean you will have more hoops to jump through when it comes time to get reimbursed for any damages. The company you select should be able to give you feedback on the carrier as well as telling you about their reputation for handling claims.
Look into your insurance companies track record of fairness and settlements being paid out in a timely manner. After any major damage to your home, you don’t want to compound any stress by having to worry about whether or not you will be able to have a place to live or whether or not your insurance carrier will pay for repairs. You will also want get background on holdback payments. This is when the insurance company will hold onto payments until the homeowner can prove that the needed repairs have been started or completed.
One area to consider is the deductible that you select for your insurance coverage. Most homeowners actually only file a claim every ten years or so, which makes it less of a risk for you if you use a higher deductible. Let’s say instead of $500 you use a $1000 deductible. If something happens, you will pay the first $1000 and the insurance company pays for the rest. Selecting that higher deductible will lower your monthly or yearly cost of the whole policy each year which may make sense for your particular financial position. On the other hand, if you don’t maintain enough savings, you may want a lower deductible so that you are able to afford the out of pocket expenses related to filing a claim.
Location, Location, Location
Another factor to consider is the location of your home. Depending on the location, your home could be prone to flooding, earthquakes, wild fires or other disasters. You can look at maps, property surveys, read news about the area you are in, speak to your agent or use your own senses when viewing the property to get a sense of disasters that could pose a risk to your home. You can also speak with the zoning board in the township, city or borough you plan to live in to get more information about risks or the history associated with the area. An insurance company may charge an extra premium since they will consider the fact if the home gets damaged by a natural disaster, you may file more claims than normal. Therefore, always check where you want to live. Location is important and you it’s usually best not to be considered high risk. You can consider it an investment in your home and if a disaster happens, you will be covered.
Everyone loves pools. If you plan to buy a home with a pool, or you plan to purchase one and have it put in, there is a financial risk with owning a pool. The insurance company will ask if there is a pool on your property. Then you will have to increase the liability part of the policy, which will cost more. But, the liability will cover your home in case there is an accident like a slip or a fall and someone tries to sue. Court costs, which can get quite expensive will most likely be covered in this case. This is something to consider when buying homeowners insurance. Other items that could pose unexpected risks include trampolines, fire pits, sheds or other structures that either aren’t included by default on an insurance policy or need special coverage.
Always Compare Coverage Details
This is a crucial step in the insurance buying process for the homeowner to follow. Your coverage needs will be different than other people and comparing policies, pricing, limits and other options between several companies will yield the best results.
If you contact at least 3-5 companies you will get a good sense for what your options are and will have a better opportunity to select the right coverage for you and your family. If you already have coverage for your car, you should reach out to that company to learn about the options for homeowners insurance, but you shouldn’t stop there. Reach out to other companies to get a complete view of your options.