Once you know the basics of a homeowners insurance policy (visit our Learning Center), here are 11 ways you can pay less. In many cases, you can get the same level of coverage for fewer dollars.
1. One Insurer, Multiple Policies - Do you have an auto insurance policy? If so, is it with the same insurance company that provides your homeowners insurance? If the answer is no, you're probably paying too much - for both policies.
Tip. Almost every insurance company that sells homeowners insurance wants its policyholders to also buy auto insurance from that company. These insurers offer so-called multi-policy discounts. Usually, these discounts are at least 10% - and some insurers apply the discounts to both the auto and the homeowners/renters policy.
2. Raise Your Deductible - The deductible is the amount you pay before insurance kicks in if you have a claim.
Example. If you have a $250 deductible and you file a claim for $1,000 in damage to your home, you pay the first $250 and your insurer pays the balance, $750. The lower the deductible you choose, the more you pay.
Tip. Depending on the insurance company, you can save between 12% and 37% if you have a deductible of $500 to $5,000.
3. New Is Better - Insurers really like newer homes. That's because it's less likely something will go wrong with the electrical, heating and plumbing systems. In addition, the structure itself is in better shape. Insurers offer discounts of as much as 8% to 15% if your residence is new.
4. Location, Location, Location - Where do you live and what type of construction is your home? In the Eastern United States, it's better from an insurance perspective to have a brick or masonry residence because such a structure has a greater resistance to wind damage. By contrast, frame homes are better in the earthquake-prone West. The right structure in the right region can save you 5% to 15%. Further, if your home is near a fire station, you will pay less for homeowners insurance.
Note. If you live in an area that is prone to flooding, you may be required to buy a flood insurance policy, which costs anywhere from a couple hundred dollars to several thousand dollars a year, depending on where you live and the risk of flooding in that area.
5. Insure the House, Not the Land - Nobody is going to steal your land. Fire and high winds won't "destroy" it. As such, when deciding how much homeowners coverage to have, don't include the value of the land, only the value of the house and any other buildings on the property. If you include the value of the land, you're paying too much.
6. Don't Insure What You Don't Have - Each year, you should review your policy to see what coverage you have for your possessions. If you have made a major purchase, you will want to increase your limits of coverage, but what if you sell something or some things? You don't need as much coverage.
Tip. Pay particular attention to items that are covered by endorsements or "floaters" to your policy, items such as jewelry and computer equipment. If you no longer have them, don't insure them!
7. Better Safe(r) Than Sorry - Smoke detectors, burglar alarms and deadbolt locks are usually worth discounts of at least 5%. You can get even bigger discounts, 15% to 20%, if you install a sophisticated sprinkler system or an alarm system that rings at the police station or a security company. However, not all of these systems qualify for discounts.
Tip. Before you install one, check with your insurer to find out what type of system qualifies for a discount and how much you would save on your premium if you installed the system.
8. Where There's Smoke There's fire - Smoking (unattended cigarette butts, etc.) produces more than 23,000 residential fires in this country each year. That's why some insurers have discounts if all the residents in a home are nonsmokers.
9. Group Discounts - Some insurers offer discounts to certain business or alumni associations.
Tip. If you are a member of such an association or associations, ask the director(s) of the association(s) if there are any insurance companies providing discounts to association members.
10. Don't Jump Around - If you've been with an insurer for a while and you like that insurer, stay put. Some insurance companies automatically have discounts for policyholders who have been with the companies for a certain number of years. For example, 5% for at least three years, 10% for at least five years.
11. Bite Is Worse Than Bark - If you have a dog or dogs, particularly if it's a more vicious breed, you will pay more for liability coverage. More and more dog bite claims are being brought, which has some insurers not exactly chomping at the bit to provide coverage to homeowners who have, as examples, Rottweilers, Pit Bulls and Dobermans. If you're considering getting a dog, keep this in mind: If you get dogs of certain breeds, your premium probably will go up, or your insurer could even decide to cancel your policy.
To learn more about home insurance, visit our Learning Center.