There are simple ways to reduce home insurance premiums without giving up the coverage you need. Many homeowners feel like they’re paying too much for their insurance. It doesn’t have to be you. There are ways to lower your costs while still enjoying adequate protection.
The average American family spends about $1,200 per year on home insurance. This is according to the National Association of Insurance Commissioners. Meanwhile, studies show that homeowners who take some steps to reduce insurance costs can save 10% to 25% on their annual expenses.
Your insurance premium is like a monthly allowance you pay to keep your home safe. You can do certain things to reduce home insurance premiums and keep more money in your pocket. These changes often make your home safer and more valuable at the same time.
How to Reduce Home Insurance Premiums
To reduce home insurance premiums, it doesn’t require major sacrifices in coverage. There are several ways that most homeowners can lower their annual costs. They range from installing security systems to simple home fixes that pay off over time. Below are seven proven ways to reduce your home insurance premiums:
1. Install Security Systems and Safety Devices
Installing security systems is like putting a superhero guard at your house. When bad guys see that your home has cameras, alarms, and sensors, they usually stay off your premises. Why do insurance companies like this? Because it means they’re less likely to have to pay for stolen items or damage.
First, consider installing a burglar alarm system. These systems emit loud noises when someone tries to break in. It scares away intruders and also alerts neighbors.
Next, consider installing smoke detectors and carbon monoxide detectors throughout your home. These devices are like having a friend who never sleeps. This friend is always alerting you when there is dangerous smoke or invisible poisonous gas.
Additionally, installing water leak detectors can help prevent expensive water damage. These smart devices sit near water heaters, washing machines, and pipes. They send alerts to your phone if they detect water where it shouldn’t be.
Water damage claims cost insurance companies billions of dollars each year. Therefore, they will reduce home insurance premiums if you have these life-saving devices. Why? Because your home is much safer.
2. Increase Your Deductible Amount
A deductible is the money you agree to spend before an insurance company starts helping. Imagine this: your bike gets damaged and costs $500 to fix. Now you have a $100 deductible; you pay the first $100, and your insurance pays the remaining $400.
Choosing a higher deductible means that you’re willing to pay your money if a risk occurs. In return, they reduce home insurance premiums because they know they won’t have to pay as much if you file a claim. It sounds good, right?
However, before you raise your deductible, you need to have enough money saved in the bank. Can you pay that amount if any risk occurs? It’s like making sure you have enough money saved before you promise to pay for an expensive trip. Furthermore, choose a deductible amount that won’t cause financial stress.
3. Bundle Your Insurance Policies
Bundling insurance policies is like buying a combo meal at a restaurant. Rather than ordering each item separately, you do the opposite. When you get your car insurance and home insurance from the same company, they usually give you a discount. Why? They want to keep all your business.
Most companies will reduce home insurance premiums by 5% or more when you bundle policies. Why does this happen? They incur less expense managing one customer with many policies. It is the opposite when handling several customers with single policies.
Also, customers with bundled policies tend to remain with the same company for a longer period. They need and will appreciate your loyalty. Instead of dealing with two different companies and phone numbers, you only have one.
4. Maintain a Good Credit Score
Your credit score is like a report card that shows how you pay your bills on time. Teachers give better grades to students who do their homework well. Likewise, insurance companies reduce home insurance premiums if you have good credit scores.
Do you know that people who pay their bills on time are also less likely to file insurance claims? Therefore, if you have a credit score above 700, you’ll probably get lower insurance rates. But if your credit score is below 600, you might pay more for the same coverage.
Here are tips on how to improve your credit score:
- Always pay your bills before they’re due.
- Don’t use too much of your available credit card limits.
- Never close old credit cards that you’ve paid off.
- Review your credit report once a year.
These simple steps can help insurance companies reduce home insurance premiums over time.
Also Read: What Affects Your Credit Score? 5 Key Factors Explained
5. Make Home Improvements and Upgrades
Make your home stronger and safer. It is like giving it safety features that protect against damage. Your home needs to survive storms, fires, and other disasters. Insurance companies will reduce home insurance premiums if your home is safe. Why? They’re less likely to have to pay for expensive repairs.
Think about this. Upgrading your roof is one of the best fixes you can make. A new roof with impact-resistant shingles can reduce home insurance premiums in areas that get lots of strong winds. Similarly, having storm shutters shows that your home can stand adverse weather conditions.
Updating your electrical, plumbing, and heating systems can also reduce home insurance premiums. Do you know that old wiring can cause fires to break out? Not just that. Old pipes can burst and drench your home. Even old furnaces can break down or become dangerous.
When you replace these systems with newer and safer versions, they see your home as less risky and often reward you with lower rates.
6. Shop Around and Compare Quotes
Are you familiar with going to different stores to find the best price for a new video game? Shopping for insurance should be the same. Insurance companies charge varying amounts for the same protection. It’s important to compare prices before you sign the papers.
Every insurance company uses its special formula to decide how much to charge. This means the same home might cost very different amounts to insure with another company. Therefore, getting quotes from at least three other companies can help you find ways to reduce home insurance premiums.
Just make sure to check for the same amount of coverage from each company when you compare. Don’t measure different benefits from different companies. It’s like comparing the same-sized pizza from many restaurants.
Additionally, ask each company about all the discounts they offer. Some companies reduce home insurance premiums for things that others hardly discount for. Imagine how much your ‘asking’ could save you. So you need to ask.
7. Review and Adjust Your Coverage Regularly
Your insurance coverage should change as your life changes. You see, many homeowners pay for more coverage than they need. Sometimes, they have coverage for things they no longer own. This doesn’t reflect well on your finances.
For instance, if you renovate your kitchen and remove high-end appliances, what happens next? Review your coverage. You could reduce home insurance premiums by decreasing your personal property coverage.
Likewise, if you convert a finished basement back to storage space, you might need less dwelling coverage than when it was a living area. But, be careful not to reduce your coverage too much. You want to ensure that you still have enough protection in case any risk arises.
Also Read: What Is a Good Credit Score Range in Canada? 5 Tips to Improve Your Score
Conclusion
Learning how to reduce home insurance premiums doesn’t have to be scary. These seven simple strategies allow homeowners in America to lower their insurance costs. The goal isn’t just to find the cheapest insurance possible. You also need the best value with peace of mind.
Start by picking one or two of these strategies that seem tailored for you. You may begin by installing smoke detectors. Then, gradually work on the other suggestions over time. Each step you take to reduce home insurance premiums puts more money back in your pocket.
Don’t be afraid to ask questions. Talk to insurance professionals who can help guide you through these options. With a little effort and the right approach, you can reduce home insurance premiums.