Follow these steps to bring down your monthly premium.

Key takeaways:

  • Do your research to find the best deals.
  • Pay a higher deductible now and get savings later.
  • A safer home equals a more affordable home.

There are many amazing perks of homeownership – a place to call your own, improved equity, an investment in your family’s future. But there are also some unavoidable costs – maintenance, taxes, and homeowner’s insurance.

How much should you expect to pay for homeowner’s insurance? The national average sits around $1,200 a year, but the exact amount depends on your home’s location and age. While that may seem like a large chunk of change, the security it provides in case of damage to your home will be well worth the cost. Plus, your mortgage company may require that you get it.

But don’t despair. There are many incentives and discounts that can bring down your annual homeowner’s insurance bill. Here are some ways to reduce your premium.

Figure out what you need

Not all homeowner’s insurance policies are the same. Start by figuring out what you actually need. There are usually four parts to a standard policy:

  • Dwelling coverage. This covers issues that arise with the physical house itself. Ideally, you want enough insurance to pay for a complete rebuild, but almost two-thirds of Americans fall short of that mark – sometimes by as much as 60%.
  • Coverage for other structures. This covers structures outside of your home, including detached garages, sheds, and fences.
  • Personal property coverage. This covers items that are damaged or lost inside the home. There are apps to help with this, including NAIC’s Home Inventory App.
  • Loss-of-use coverage. As the name suggests, this covers expenses if you’re unable to live in your home for a period of time due to damage from a natural disaster or the need for other major repairs. It typically comes out to 20% to 30% of your home value.

Do your research

Although your mortgage lender may require you to purchase home insurance, you can decide which insurer you use. Shop around and get multiple quotes from portals like InsuranceQuotes.com and check if your state’s insurance commissioner has an insurer “complaint index.” Discounts may be available through your job or financial institution. Ideally, you want a provider with a positive rating from Moody’s, Standard & Poor’s or AM Best

But price shouldn’t be your only concern. How efficiently and transparently does an insurance company provide service? How fast do they process claims? Ask any potential providers these questions and be sure to go through their policy carefully before you sign.

Pump up your deductible

In general, the higher your deductible, the lower your monthly insurance premiums. Raise it by $500 to $1,000 and you can save up to 25% on your premium bill. But you will need to have a financial cushion to cover a potentially higher out-of-pocket expense. Your agent should be able to advise you on the balance of deductible versus premium.

Another thing to note is that expenses can vary by geography, with separate deductibles that cover specific types of damage – east coast dwellers may have windstorm deductibles, California residents may see earthquake deductibles.

Avoid small claims

Another way to keep your premium down is to hold off on filing small claims. Save that for the big expenses. Paying out-of-pocket for smaller bills may qualify you for discounts for being claim-free over a period of years.

But how much does this really hit your wallet? Up to 40% in some cases, and that increase can hang around for years.

Bundle your home and auto insurance

If you buy your home and auto insurance from the same provider, you can save as much as 25% depending on where you live and the insurer’s policies. Here’s how to bundle smartly:

  • Shop around regularly. Home and auto costs can vary from year to year, so it pays to get new quotes from multiple providers every year.
  • Play the field. Get bundle offers from at least three insurers. An independent insurance agent can help take the guesswork out of this process.
  • Ask about third parties. If an insurer uses an affiliate or third-party insurance company for its policies, you may get a smaller discount. You also will have more than one company to manage, taking away one of the perks of bundling.

In addition, if you keep your bundled policies with the same company over a period of years, and if you’re claim-free and otherwise in good standing, you can save even more. 

Make your home safer

Upgrades to your home’s infrastructure and security can improve your rate. Some improvements to consider:

  • Add impact-resistant roofing and storm shutters to avoid windstorm damage.
  • Replace outdated electrical systems, heating, and plumbing to dodge fire and flood damage.
  • Install dead-bolt locks, smoke detectors, or burglar alarms.

Before you begin, request an updated home inspection to determine which improvements can help yield the greatest discounts.

Go hunting for other discounts

Ask your agent if he/she offers additional discounts if you:

  • Keep the same policy for over three years
  • Pay your annual premium in full up front
  • Go paperless with automatic bank withdrawal
  • Work as a firefighter, teacher, or engineer
  • Don’t let smokers live in your house
  • Are retired

Ask questions

Buying a home is not for the faint of heart. It requires a huge investment in sweat, time, and money. Lowering your home insurance premium is a great way to reduce the financial burden of the home buying process. The best way to do that successfully is to talk to an insurance professional, someone who can help you unlock opportunities to save. Contact the team at NICRIS Insurance for a free, personalized review to match you with home insurance that you can afford.