Ways to Lower Your
1. Shop Around
It'll take some
time, but could save you a good sum of money on homeowners
insurance costs. If you are a
first time homebuyer ask
your friends, check the Yellow Pages or contact your state insurance
department. Also check consumer guides, insurance agents, companies
and online homeowners insurance quote services. This will give you
an idea of price ranges and tell you which companies have the lowest
prices. But don't consider price alone. Talk to a number of insurers
to get a feeling for the type of service they give. Ask them what
they would do to lower your homeowner insurance costs.
financial stability of the companies you are considering with rating
companies, and consult consumer magazines. When you've narrowed the
field to three insurers, get price quotes.
2. Raise Your Deductible
the amount of money you have to pay toward a loss before your
insurance company starts to pay a claim according to the terms of
your homeowners insurance policy. The higher your deductible, the
more money you can save on your premiums. Remember, if you live in a
disaster-prone area, your homeowners insurance policy may have a
separate deductible for certain kinds of damage. If you live near
the coast in the East, you may have a separate windstorm deductible;
if you live in a state vulnerable to hail storms, you may have a
separate deductible for hail; and if you live in an earthquake-prone
area, your earthquake policy has a deductible.
3. Don’t confuse what you paid for your house
with rebuilding costs
The land under
your house isn't at risk from theft, windstorm, fire and the other
perils covered in your homeowners insurance policy. So don't include
its value in deciding how much homeowners insurance to buy. If you
do, you will pay a higher premium than you should.
4. Buy your home and auto policies from the same
that sell homeowners insurance, auto and liability coverage will
take 5 to 15 percent off your premium if you buy two or more
policies from them. But make certain this combined price is lower
than buying the different coverages from different companies.
5. Make your home more disaster resistant
Find out from your
insurance agent or company representative what steps you can take to
make your home more resistant to windstorms and other natural
disasters. You may be able to save on your premiums by adding storm
shutters, reinforcing your roof or buying stronger roofing
materials. Older homes can be retrofitted to make them better able
to withstand earthquakes. In addition, consider modernizing your
heating, plumbing and electrical systems to reduce the risk of fire
and water damage.
6. Improve your home security
You can usually
get discounts of at least 5 percent for a smoke detector, burglar
alarm or dead-bolt locks on your homeowners insurance. 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. These systems aren't cheap and not every system qualifies
for a discount. Before you buy such a system, find out what kind
your insurer recommends, how much the device would cost and how much
you'd save on premiums.
7. Seek out other discounts
several types of discounts on homeowners insurance, but they don't
all offer the same discount or the same amount of discount in all
states. Again, if you're at least 55 years old and retired, you may
qualify for a discount of up to 10 percent at some companies. This
is because retired people stay at home more than working people and
are less likely to be burglarized and may spot fires sooner, too.
Retired people also have more time for maintaining their homes. Some
employers and professional associations administer group homeowners
insurance programs that may offer a better deal than you can get
8. Maintain a good credit record
solid credit history can cut your homeowners insurance costs.
Insurers are increasingly using credit information to price
homeowners insurance policies. In most states, your insurer must
advise you of any adverse action, such as a higher rate, at which
time you should verify the accuracy of the information on which the
insurer relied. To protect your credit standing, pay your bills on
time, don't obtain more credit than you need and keep your credit
balances as low as possible. Check your credit record on a regular
basis so that your record remains accurate.
9. Stay with the same insurer
If you've kept
your coverage with a company for several years, you may receive a
special discount for being a long-term policyholder. Some insurers
will reduce their homeowners insurance premiums by 5 percent if you
stay with them for three to five years and by 10 percent if you
remain a policyholder for six years or more. But make certain to
periodically compare this price with that of other policies.
10. Review the limits in your policy and the
value of your possessions at least once a year
You want your
homeowners insurance policy to cover any major purchases or
additions to your home. But you don't want to spend money for
coverage you don't need. If your five-year-old fur coat is no longer
worth the $5,000 you paid for it, you'll want to reduce or cancel
your floater (extra insurance for items whose full value is not
covered by standard homeowners insurance policies such as expensive
jewelry, high-end computers and valuable art work) and pocket the
11. Look for private insurance if you are in a
If you live in a
high-risk area -- say, one that is especially vulnerable to coastal
storms, fires, or crime -- and have been buying your homeowners
insurance through a government plan, you should check with an
insurance agent or company representative or contact your state
department of insurance for the names of companies that might be
interested in your business. You may find that there are steps you
can take that would allow you to buy insurance at a lower price in
the private market.
12. When you’re buying a home, consider the cost
of homeowners insurance
You may pay less
for homeowners insurance if you buy a house close to a fire hydrant
or in a community that has a professional rather than a volunteer
fire department. It may also be cheaper if your home’s electrical,
heating and plumbing systems are less than 10 years old. If you live
in the East, consider a brick home because it's more wind resistant.
If you live in an earthquake-prone area, look for a wooden frame
house because it is more likely to withstand this type of disaster.
Choosing wisely could cut your premiums by 5 to 15 percent.
Check the CLUE
(Comprehensive Loss Underwriting Exchange) report of the home you
are thinking of buying. These reports contain the homeowners
insurance claim history of the property and can help you judge some
of the problems the house may have.
Suvadip Das is a
research fellow in management and at the same time a web developer.
Web design is his passion. He has worked for Freelance Writer
Organization and various websites including
His credentials include writing keyword enriched articles and
features on various issues including
residential mortgage loans,
home equity lines of credit and