All forms of insurance are important, be it life, motor vehicle, or medical insurance. Homeowners’ insurance is necessary for all homeowners, whether they own the property outright or still pay a mortgage.
Repairing damage to your property is incredibly expensive. Fortunately, having homeowners’ insurance can defray most, if not all, of these costs. However, compensation depends on what caused the damage and the type of coverage in your policy. Even though having homeowners’ insurance is beneficial, you shouldn’t overpay.
Unfortunately, unlike auto insurance, homeowner’s insurance isn’t competitive. Saving money on your house insurance requires that you understand some intrigues. Below are a few ways to save from your home insurance policy.
1. Shop Around
While it will take much of your time, shopping around for potential insurers can save you a lot. Ask for recommendations from family members, friends, and colleagues, contact the state insurance department, and check the yellow pages to find multiple options. Most states have information on multiple home insurance providers with typical rates and complaints against the company.
You should also consider reading reviews from consumer guides, insurance quote services, and insurance agents. Doing this will give you some baseline information on various policies and prices. However, your decision shouldn’t be solely based on the price. Your preferred insurer should offer a reasonable price and assure quality services.
2. Bundle Your Policies
As mentioned, auto insurance is very competitive, with endless companies offering these services on the market. Insurance providers are battling for the wallets and hearts of motor vehicle owners, and you can take advantage of this desperation to get affordable home insurance. Bundling your home and auto insurance is a prudent way of saving on insurance costs.
Insurers offer multiple insurance options for bundling their products. You can get a multi policy, multiproduct, or multiline discount depending on the company. Bundling your auto and home insurance comes with the following benefits;
- More savings – Multi policy insurance discount saves up to 25% of the total costs. However, this depends on where you live and the insurance company.
- Insurance security – If you’ve previously made insurance claims or had tickets, the insurer will less likely drop you if you have other policies in the same company.
- Simple policy management – The complexities of managing bundled policies from the same company are less.
To decide whether bundling your insurance policies is beneficial, compare home and auto insurance quotes separately and quotes from the bundled policy. If the combined total of the separate policies is cheaper than the bundled rates, there is no point in bundling them.
Large policies often get steep discounts. Since homes cost most than cars, homeowner insurance is usually higher. You will save a lot from bundling if your home insurance is pricier than auto insurance.
However, if you have poor credit, multiple accidents, and live in states with high auto insurance rates, your auto insurance might be expensive. In such a case, you can choose a company that dwarfs a 20% discount on bundled home and auto insurance policy. To benefit more from bundling:
- Compare bundled policies from multiple insurers – You can do this online or through an agent. An insurance agent can source prices from multiple companies to help you find the best rates.
- Shop for quotes regularly – The cost of home and auto insurance keeps changing. Getting quotes from separate and bundled policies ensures that you still have the best rates.
- Check insurers’ third parties – Most insurance companies use third-party companies, also called affiliates, for home or auto policies in your bundle. While you can still save on the cost, you won’t have the convenience of dealing with one insurer.
3. Increase Your Deductible
Paying a low deductible (the amount paid when filing an insurance claim) often translates to high premiums or monthly payments. You should consider increasing your deductible to lower your monthly or yearly insurance payments. You can save a lot by doing this, especially if you don’t file a claim for some time.
Most homeowners stay for more than 10 years or more before filing their first claim. With a high deductible, you can save thousands of dollars, which can be directed to investment or retirement accounts. However, before thinking of raising your deductible, ensure that you set aside some money to cover the deductible if a disaster strikes.
4. Modify Your Insurance Coverage
Typically, a homeowners insurance policy includes liability insurance, structure insurance, personal property insurance (covers your belongings in the house), and additional living expense cover, which compensates for the costs incurred if your home becomes uninhabitable. Most homeowners don’t know that they can choose different levels and insurance amounts for these coverages.
Any cover that pays more compensation during a claim obviously costs more in terms of premiums. For instance, personal property coverage, which compensates for the current value of damaged belongings, costs less than insurance coverage for brand-new items. Similarly, your insurance will cost more after a living room, roof, or kitchen upgrade.
5. Work On Your Credit
Most, if not all, insurance companies will check your credit score before providing homeowners’ insurance. Some use a credit-based insurance score, a unique credit score used by insurers to assess individual risk of filing claims. Homeowners with bad credit can still get homeowners insurance. However, they will pay more than homeowners with good credit.
While credit-based insurance score slightly differs from the score used by lenders, it is based on the same factors, including your credit utilization, payment history, and defaulted credits. Consumers cannot view Credit-based insurance scores. However, checking your general credit score gives you a rough idea of your standings.
To improve your credit score:
- Make your payments on time: Paying off your utility bill and credit card balances promptly eliminates the costly monthly interest fees. Besides, a zero balance directly improves your score.
- Don’t use all your available credit: Keep your credit limit balances below 50%.
- Find the right credit card and stick with it: Avoid opening several credit accounts within a short period. Open a few and stick with them. Establishing old accounts is also better than opening new ones.
Buying homeowners’ insurance is certainly prudent, but you shouldn’t spend a fortune paying for cover. Apart from the tips mentioned above, file insurance claims judiciously, investigate possible discounts, and reduce risks. If you find your homeowners insurance still expensive, you can sell your home for a rented property.