A little time and money up front can help you save down the road.
- It’s important to know what determines your insurance rate
- Many insurers offer discounted bundles
- There are experts who can help you find the coverage you need at the right price
Home insurance is much like an umbrella on a stormy afternoon – you’ll be a lot safer (and more comfortable) if you have it. Home insurance protects your bank account in the event of a disaster, be it manmade (theft, vandalism) or natural (lightning strikes, fire). But that protection comes with a cost.
Not all home insurance policies are created equal – or priced equally. There are many factors that go into the total price and, fortunately, many ways to find a policy that fits your budget. Below we present a primer on how insurers set rates and what you can do to get the most coverage for your dollar.
A brief guide to homeowners insurance rates
There are several factors that go into the cost of home insurance.
- Claim history. Have you submitted insurance claims in the past? Were these claims small or large? Were there claims on the property before you lived there? Insurers will look at this history to see what level of risk you present. The more claims they find, the higher your rate will likely be.
- Neighborhood. The local crime rate, nearby emergency services, and the availability of building materials are all important factors. If your block has relatively low crime and a fire station around the corner, that can bring your insurance costs down.
- Condition of the home. Have you kept up on maintenance, repaired leaks in the roof, upgraded that aging backsplash? If not, there’s a chance that insurers will raise your rates or pass you over entirely. Got a cute golden retriever or black lab? Dogs can create a lot of property damage, and insurers don’t usually look too fondly on that.
The good news is that there are things you can do to reduce your homeowner insurance premiums even if you have several of the above factors working against you.
It’s worth the time to shop around and get pricing from multiple insurers. Start with the National Association of Insurance Commissioners, which can assist you in finding an insurer in your state. Then look for group coverage opportunities through your employer, an association membership, or a trade or credit union.
It’s also worth combing through consumer guides and talking to actual insurance agents. They can give you a sense of your price range and talk you through other options to lower your rates.
And even after you have a policy, there are things you can do to lower your premium. Did you pay off your mortgage, add a sprinkler system, or get rid of potentially dangerous recreational items like swimming pools or trampolines? Letting your insurer know about these improvements could help.
Pay more on your deductible
As a general rule, the higher your deductible, the lower your premiums. Most insurers recommend at least $500. If your wallet can handle more, a $1,000 deductible can save you up to 25 percent. But if your home is on the Florida coast, the shores of Lake Pontchartrain, or other areas with extreme weather, chances are you’ll need a separate deductible that can protect you from the fallout from specific natural disasters.
The one downside to a high deductible is that you’ll be on the hook for small expenses – a broken window, leaky pipe, moldy door frame – that can add up over time.
If you have your eye on a major home improvement like a renovated garage or a new storage shed, think carefully about the materials you use for the project. Steel- or cement-framed buildings are cheaper to insure because they can handle a variety of weather conditions. Wood frames, on the other hand, are flammable and usually more expensive.
Another popular home addition is also a popular insurance headache – a swimming pool. While a pool may add value to your property, most insurers consider it an “attractive nuisance” and it will likely push up your rates.
Use one insurer for multiple policies
When you purchase more than one policy with the same provider, you can usually save up to 25%. The exact amount depends on the insurer’s practices and your zip code. Here are a few other tips:
- Get multiple offers. Many insurers offer bundles, so get quotes from at least three. If this feels like a lot of legwork, an independent insurance agent can be a helpful ally.
- Take stock every year. Auto and home insurance rates change often so it’s worth it to get new quotes every year.
- Ask about affiliates. Some firms use third-party insurers, or affiliates, which sometimes don’t give as generous a discount.
Also, if you stay with one insurer over many years, they often reward that loyalty with even deeper discounts.
Upgrade your security
Home safety not only protects you and your loved ones, it can also give you a better home insurance rate. Here are a handful of possible improvements that appeal to insurers:
- Avoid water and fire damage by replacing outdated heating, plumbing, and electrical systems
- Upgrade your smoke detectors and add a security system as well as dead-bolt locks
- Prevent wind damage with storm shutters and an impact-resistant roof
It’s worth noting that these systems can be expensive, so ask potential insurers what kind of safety features they cover and how much you will save. You will probably need to provide proof of central monitoring in order to receive the discount. But before you do any of this, ask for an updated home inspection to see what other upgrades will bring discounts.
Ask the experts
Home insurance can certainly be affordable, but it does require some legwork and know-how. Shop around, increase your deductible, give your home security an upgrade, and, most of all, have confidence that you can do this.
When you have questions, it’s worth consulting the experts to get answers. The team at NICRIS Insurance is happy to sit down for a free, personalized review of options that work for your budget. Contact us today and let us help you get the coverage you need at a price you can afford.