How to Save Money on Homeowners Insurance

By: , Contributor

Published on: Dec 26, 2019

Homeowners insurance can be a huge expense. Here's how to minimize it.

Whether you're buying a home to live in yourself or to rent out to other people, you'll need homeowners insurance to protect yourself from the many financial unknowns involved. You'll also need insurance to qualify for a mortgage. Here's how to save money on homeowners insurance:

  1. Shop around.
  2. Bundle your home and auto insurance.
  3. Raise your deductible.
  4. Reduce the risk associated with your property.
  5. Improve your credit score.
  6. Tackle repairs yourself -- without going through your insurer.
  7. Choose the right neighborhood to buy in.

1. Shop around

You never know when one insurance company might offer you a better rate on a homeowners policy than another. Before you settle on the first or even third offer you receive, get different homeowners insurance quotes to see which rates are most competitive. But, make sure you're comparing apples to apples. You might reduce your premium with one homeowners insurance policy, but if it results in less coverage and a higher deductible each time you file a claim, it may not be worth it.

2. Bundle your home and auto insurance

Many companies that sell homeowners insurance also sell auto insurance. If you own a vehicle as well, and you buy both types of insurance from the same provider, you could save some money on your premiums for both.

3. Raise your deductible

With homeowners insurance, you'll be required to fork over a deductible for your policy to cover damage to your property. Your deductible is the amount of money you're responsible to pay per claim, and the higher it is, the lower your premium costs are apt to be. This money-saving strategy can work well if you're buying new construction, or a newer home in great shape. For older homes, however, it's riskier, since your chances of damage may be higher -- and that means you'll be paying a higher deductible every time you actually need to use your insurance.

4. Reduce the risk associated with your property

Taking steps to make your property safer could cut your insurance costs substantially. Your insurer might reward with lower premiums for anything you do that reduces risks to your property, such as:

  • Installing a security or alarm system, which reduces the risk of a break-in.
  • Putting in storm shutters or other reinforcements to protect your home from weather events.
  • Installing leak-detection devices, which are relatively cheap and could save you a bundle since leaks are a big source of homeowners insurance claims.

5. Improve your credit score

Having good credit can help you snag a lower rate on your homeowners insurance policy. If your credit needs a boost, pay your incoming bills on time and pay off a chunk of your existing debt to help your score climb. Incidentally, doing so will make it much easier for you to qualify for a mortgage and lock in a favorable rate on it.

6. Tackle repairs yourself -- without going through your insurer

Though homeowners insurance won't cover every home repair you'll encounter, it will generally pick up the tab for damage that occurs outside of normal wear and tear on your property. But if you're able to tackle those repairs yourself, and on your own dime, without asking your insurer to step in, you may be rewarded with lower premium rates going forward.

7. Choose the right neighborhood to buy in

Insurance companies establish their rates for homeowners policies based on collective risk, which means that if you buy a home in an area with a high crime rate, you'll likely pay higher premiums. Choose a statistically safer neighborhood, and your costs shouldn't be as high. The same holds true if you're buying a home in a flood zone -- the potential for damage is higher, and so are insurance rates. Avoid flood zones, and you stand to reap some savings. FEMA makes this easy by offering a Flood Map Service Center. Just plug in the address to see whether a property is in a flood zone.

The less money you pay for homeowners insurance, the more you'll have available to put elsewhere. Follow the above steps, and with any luck, you'll save yourself some serious cash.

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