Homeowners insurance protects your home from damage caused by disasters, inclement weather, fire, or theft
Mortgage holders must have homeowners insurance by law to protect the lender until the loan is fully paid off. Fortunately, there are many available options when it comes to reducing the costs of your homeowner’s insurance. It all begins with an understanding of your coverage options.
Tips for Reducing Homeowners Insurance Costs
We pay for homeowners insurance because we want to protect the integrity of our home and its contents. For most of us, our most valuable assets are our homes and our personal effects. So, it makes sense to carefully review the type of coverage with homeowners insurance.
This brings us to five critical points that must be considered if you are looking to cut the costs of your homeowners insurance. We begin with the concept of comparative shopping to source the best possible coverage at the most competitive price.
Shop Around for the Best Price on Homeowners Insurance
Chances are you shopped around for your property, your mortgage broker, and the furniture in your home. Why not shop around for the best-priced homeowner’s insurance? Fortunately, there are plenty of options available to you since policies differ greatly from one to the next.
Costs and coverage will vary dramatically, depending on a host of factors. For example, it’s best to use aggregator sites to compare the prices of homeowners insurance premiums.
Every company is different; some are financially solid and others aren’t. When it comes to shopping around, don’t limit yourself to one or two options. Go the whole 9 yards and check with direct writers, captive sellers, and independent agents.
You’ll be surprised how much you can save when you shop around.
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Improve Your Credit Score
Earning a higher score is a way to reduce the costs of the terms you get for mortgage rates and the attendant annual fees you pay for homeowners insurance. People with high credit scores get preferred rates on home loans, credit cards, and vehicle financing. You can check your credit score with one of the big companies.
It comes as no surprise that a great credit score will also help you with insurance companies who look towards your risk profile before insuring you.
There are many ways to boost your credit score, including paying down credit card debt, reducing the outstanding principal on your existing loans, making payments on time, limiting the number of new accounts on your profile, and generally being a fiscally responsible citizen.
Over time, your credit score will rise.
Enhancing Home Security Systems
Homeowners’ insurance policies protect your home and its contents from theft, damage, and unforeseen events. One way to lower your homeowner’s insurance is to add protections to your property which can help to lower your premiums.
Essential security systems with burglary detection and fire monitoring are great, but you can couple that with additional smart home protections in the form of video cameras, leak detectors, and low-temperature sensors.
You may be surprised to learn that your homeowner’s insurance policy makes accommodation for deep discounts on these additional protections.
If you upgrade your home security system to include all these features, you may enjoy discounted rates on your homeowner’s insurance policy.
Opt for a Higher Deductible to Reduce Premiums
At first glance, this looks like you’d be cutting your nose to spite your face, but there is merit to this method.
Much like health insurance plans, you can get an affordable homeowners insurance premium if you choose a high deductible. If you’re the type of person who hardly ever claims, you may want to consider increasing the size of your deductible (your out-of-pocket expense) in exchange for a much lower premium.
Many insurance deductibles fall in the $100 range for premium-grade homeowners plans. If you increase your out-of-pocket expense to $1000+, you will see a significant decrease in your premium.
If you make several small claims with your insurance company, you will quickly see your homeowner’s insurance costs rise. In some instances, they may cancel your policy outright. Rather than risk all of that, pay out-of-pocket and keep your low premium.
Bundle Home and Auto Insurance for Savings
Bundling is when you combine policies like automobile insurance and homeowners insurance. These package deals are designed to save you money in the long term. Many different insurance companies offer discounts when you bundle, anywhere in the region of 5% – 15%.
Once again, go back to point #1 and shop around for the best price at multiple companies before you simply accept a bundled price when you combine policies.
If this is your first time applying for a homeowners insurance policy, you may qualify for a new policy discount.
Be sure to tell the insurance broker that you are a non-smoker and would like that added to your policy since you are less of a fire risk.
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Homeowners Insurance Policy Final Thoughts
Remember: your homeowner’s insurance policy covers your home and your property. If you’re looking to rent out your home to tenants, then you may want to look into buying renters insurance too.