6 ways to lower your homeowner’s insurance premiums
Homeowners insurance is absolutely necessary in order to protect one of your biggest investments. However, you may not be aware of all the ways you can save money on your homeowner’s policy. You may even make your home safer in the process.
We offer 6 ways to lower your premiums and raise your peace of mind.
1. Shop and compare
Anytime you’re considering a big purchase, such as new car, a television, appliances or a computer, you probably do a lot of research to make sure you’re getting the highest quality and best deal. It should be no different when it comes to homeowners’ insurance. Your research should include online comparisons, consumer guides, and state insurance departments. The National Association of Insurance Commissioners provides information on licensed insurers in each state, including complaints. It’s also a good idea to ask friends and family for referrals or recommendations.
You’ll want to go beyond simply looking for the best price, however. According to the Insurance Information Institute (III), you want your insurer to offer a fair price while still delivering quality service should you need to file a claim. When assessing service quality, talk to different insurers and ask them what they would do to lower your costs. This is also a great way to get a feeling for the type of service they give.
2. Be willing to pay more out-of-pocket
One way to save on the cost of insurance is by raising your deductible, or the amount of money you agree to pay out-of-pocket for an incident before your insurance kicks in. While it might seem like a gamble, this can end up lowering your monthly premium. The higher the deductible, the more you save, so look at your budget and determine what you are able to pay yourself in the event of an incident.
3. Educate yourself about replacement cost vs. actual cash value
Replacement cost and actual cash value are two terms related to how an insurer will pay a claim in the event of damage or theft. It’s important to know the difference and understand which type your policy covers. Replacement cost pays what it would cost to replace your home or personal property at its current value. Actual cash value (ACV) pays based on the value of the item when you bought it. “If, for instance, a laptop you bought for $1,000 is stolen, with replacement cost insurance, you will get $1,000 for a new laptop. With ACV, you’ll get the current market value of the laptop – which will most likely be far less, since it has probably depreciated over time,” according to Forbes.
When it comes to the loss or repair of your home, ACV won’t usually cover things like increased cost of building materials, permits or removal of damaged property.
A premium with ACV costs less, but you will generally pay more out-of-pocket after a loss, so you need to decide how you want to structure your policy to get the most benefit. It might be worth it to pay a little more and have your house or belongings fully replaced.
4. Do some home improvements and upgrades
If you have an older house, chances are it might be time to do some upgrades that will not only make your home safer but also help lower your insurance rates. If you live in an area prone to hurricanes, consider installing storm shutters or hurricane-resistant windows. Make repairs to your roof and add reinforcement to protect against wind damage. For those in earthquake zones, you can retrofit older homes so they are better able to withstand earthquakes. All homeowners should consider modernizing plumbing, heating and electrical systems, which will reduce the risk of fire or water damage from old pipes and wiring. All of these home improvements have the additional benefit of helping you save on your insurance costs.
5. Make your home safer
Alarm systems can benefit you in more ways than one. First, installing a home security system will help safeguard your home and loved ones from intruders. Install smoke detectors as well, so your family can safely get out of the house in the event of a fire. These security measures can also help lower your premiums. “Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations,” according to the Insurance Information Institute.
Talk to your insurance provider and ask for recommendations or systems that could help lower your premiums.
Bundle services for extra discounts
Another way to lower your premiums is to insure other things that you own with the same company. If your insurance provider also sells auto, boat or liability insurance, you can group them together and get anywhere from 5% to 15% discount.
Homeowners’ insurance is necessary to protect your home and family. There are many things you can do to both save money and increase safety and peace of mind. Contact us today for a quote.