You may think you have a perfectly reasonable home insurance rate. It is within your budget, it is affordable, it has good coverage, and it seems to be cheaper than what other people are paying.
That shouldn’t stop you from shopping around, though. Complacency is what drives us backwards. You may have a great deal… but that doesn’t mean you couldn’t have an even greater deal!
Lowering the Costs
A lot of people put tasks like these on the bottom of their to-do list. They either think that the pay off is too small or the required work is too much. However, they couldn’t be further from the truth! These suggestions can be put into place easily.
1) Buy Your Auto & Home Policy From Same Insurer
You know how grocery stores will often times have manufacturers coupons hanging around the aisles that say something like “Buy any two bags of Frito Lay chips priced above $2.99 and get a free Frito Lay dip if your choice!”? The idea is that they can give up the revenue on the third item because it will entice you to buy two of their products which you otherwise wouldn’t have purchased. And if you would have purchased one, they are getting you to purchase one more.
The same works for insurance. Some companies that sell homeowners, auto, and liability coverage will reduce your premium just for purchasing more than one policy from their company. But the comparison isn’t exactly apples to apples. In the case of the chips, you may purchase another bag because of the sale. In the case of your insurance, you are already purchasing each of the policies from different companies. You are just choosing your company based on incentives they give you.
Homework: Call a few companies in your area and ask what your TOTAL rate would be for auto and homeowner.
2) Consider Costs of a New Home
Newer homes electrical systems, heating systems, plumbing systems, and overall structure are, on average, in better shape than older homes. Insurers are willing to offer discounts on newer homes because of this statistical fact.
This is something that you mostly need to do while you are in the market for purchasing a home. However, that isn’t entirely true.
Homework: If you have done some massive repairs to any of the mentioned systems in an older home, ask your insurance company for a break!
3) Insure Your House, Not the Land
When you buy an amazing house on an acre of land for $500,000, the price you pay includes the value of the land. How much? It depends on your market.
Do not make the mistake of insuring the combined value as this will lead to a higher premium. Is the land at risk from theft? A windstorm? Fire? Or any of the other miscellaneous things your homeowners insurance covers against? No, so why are you insuring it against those things?
Homework: Assess the value of your property as accurately as possible. Of that $500,000, is $75,000 the value of the land? If so, lower your premium by lowering the value insured to $425,000.
4) Improve Home Security
Something else that insurers give discounts for is improving your home’s security. How can you do this? Install operable smoke detectors, burglar alarms, and/or dead bolt locks. Sometimes discounts are even offered for more advanced systems like sprinkler systems (for fires) and a fire and burglar alarm that calls the police or security company in case of emergency.
Don’t just go out and start installing everything, though. Not everything qualifies for premium reductions.
Homework: Call your home insurer and see if you could lower your rates using the above security measures.
5) Raise Your Deductible
The Insurance Information Institute has claimed that you can save up to 25% on your insurance premium if you raise your deductible from $500 to $1,000.
A lot of people hesitate to commit to these changes because they are scared of the $1,000 deductible. However, you need to remind yourself that homeowners insurance isn’t for small repairs, it is for larger repairs. Any benefits of a lower deductible will be quickly dissolved by higher rates.
Homework: Check your deductible and see what the new premium would be for raising the deductible. If it makes sense, commit.
6) Eliminate or Reduce Coverage You Don’t Need
Your policy should cover any major purchases or additions you have made to your home. But that doesn’t mean you should be spending money on coverage you don’t need. Most additions to your home – appliances, electronics, etc – will depreciate over time.
You need to review your policy limits on an annual basis to make sure they match up with the actual values of the possessions you own. Reiteration: These possessions depreciate, so you should do this once per year.
Homework: Review your policy and lower or raise any limits that do not match the actual value of your possessions.
Go Save Money!
Good luck dealing with your insurance company(ies). Let me know if you face any opposition from the companies when you try to get lower rates. Or better yet — let us know of any successful tactic you use to get even lower rates!