Today we review how to save money on your home insurance without sacrificing your coverage. Let’s see if you can save big on homeowners insurance. In the last two articles, we talked about the components of your homeowners insurance policy. In this article, we dig into strategies to maximize your coverage while keeping the cost of your policy under control.
Bundles are Big
One of the best way to get a steep discount on your home insurance is to “bundle” it with your car insurance. When you carry multiple policies, the company sees dollar signs and does the “cha ching” motion. To entice you to want to do this, they often offer a discount on your policies.
Example: We used to have our car and homeowners policy with a well-known initialed insurance company. Frustrated with rising cost of car insurance, I switched our car insurance to a national company with funny commercials. Initially, I saved money (and I had a supreme sense of personal satisfaction to stick it to the man). Six months later, my homeowners renewal shot up $400 because I had moved the car insurance policies. I no longer had the multi-policy discount. I moved the car insurance policies back over to the first company and behold, my home insurance dropped back down AND my car insurance policies were magically cheaper than when I left six months before. Funny, that.
Raise that Deductible
This one is a great lever to pull, in both home and car insurance. Your deductible is the amount you will pay before insurance coverage kicks in any money. So if you have $2000 in property damage and you have a $500 deductible, you will pay the first $500 in damage and insurance will pay the other $1500.
When you raise the deductible, say from $500 to $1000, you are assuming more risk and the insurance company recognizes that fact by dropping your premium. The insurance company knows you are now on the hook for more money.
When considering raising your deductible, there are a few items to review:
- Are you comfortable paying out more money in the instance you have a claim? Do you have access to that extra $500 or more?
- How much are you actually saving off your policy? Is the savings worth the risk of paying out the extra deductible? (If I am only saving $15/year, I’ll probably keep the lower deductible just for the comfort of knowing I am not out the extra money if I file a claim. For $100/year, I might take want to absorb the risk and pull the trigger.)
- Check your mortgage documents for policy requirements. Many mortgages require you keep the deductible below a certain threshold, often $1,000.
Ask for All the Discounts
We talked about the multi-policy discounts above, but your insurance company may offer other discounts.
- Home alarm: If you have a home alarm system that is monitored by a third party, you may be entitled to a discount.
- New/renovated home: If your home is a newer construction or has undergone a significant renovation, the insurance company factors in the updated building codes lowering the risk of fire or other damage that may be higher in homes built in earlier decades.
- Roof age: If you had a new roof put on, ask about a discount for having that work done. That roof cost a chunk of change to replace, so try to use it to your advantage here. Potential bonus savings if the roof is rated as “hail resistant.”
- Loyalty: If you have been with your insurance company for more than a year, they may offer you savings to reward that loyalty (and incentivize you not to leave).
- Protective devices: Smoke detectors for the win! Check to see if your smoke alarms qualify you for a discount. If you don’t have qualifying smoke alarms, ask if you can install devices that will qualify you for a discount. You can increase your safety in your home while offsetting the cost.
- Mature policyholder: Some companies offer a discount to policy holders over a certain age (often 55) who are also retired.
- No claims discount: If you have a few years without claims, you might be eligible for a discount since the insurance company now sees you as their own good investment.
- Autopay: If you enroll in an auto-pay program, the insurance company is more likely to get their money, which makes them want to incentivize you to sign up. Hence, the discount.
Shop Around to Save Big On Homeowners Insurance
Once in awhile, it is good to shop around and see what rates are being offered at other companies. Is this a huge hassle? Yes, yes it is. If you want best coverage for the best price, you need to complete this step.
It makes sense to do this shopping in conjunction with your car insurance policy because, as I mentioned above, bundling usually saves you in the long run. As I found out, simply moving your car policy away and then moving it back can provoke better rates. Investopedia has a great overview of different home insurance companies and what they have to offer. You can narrow down which companies potentially meet your needs.
If you get a tantalizing quote from another company, call your current company and ask them if they can beat it before you go through the pain of switching companies. Approach this process the same way you approach haggling over the cable price: call, threaten to leave, ask why the cost is so high, let them know you shopped around and ask what they can offer.
Well, folks, that wraps up our three-part series on home insurance. I know it is not the most thrilling topic on the planet, but you want to get home insurance right so it is available when you need it. As always, I’m here to help with any homeowner questions. I don’t always have the answer but I am top-notch at finding the person who does.
