Year-End Review: 9 Tips to Cut Homeowners Insurance Costs

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Although you may dread doling out large sums of cash for your homeowners policy year after year, you simply can’t afford to go without it. That would be crazy. However, you don’t have to break the bank to carry suitable coverage.

It’s nearly 2014, so it’s time for a year-end review of how much you’re paying for homeowners insurance. Money Talks News founder Stacy Johnson offers some tips that can help you slash your homeowners insurance rates by 20 percent or possibly more. Watch the video below and continue reading for additional cost-cutting strategies.

1. Increase your deductible

The more liability you assume, the lower the rate you’ll pay. You can save 10 percent to 30 percent on your premium by raising your deductible from $250 to $1,000.

Afraid that you may not be able to afford the higher amount you’ll pay out-of-pocket in the event of an emergency? Simply beef up your emergency fund to cover the increase. That way, the money will be there when you need it, and you’ll save a substantial amount of money each year on your policy.

2. Check for multiline discounts

It pays to bundle up. According to the Insurance Information Institute, some companies will reduce the price of your policy by 5 percent to 15 percent if you purchase two or more policies with them.

3. Don’t overinsure (but don’t underinsure either)

This is often confusing to people: You want sufficient insurance to cover the cost of replacing your home from scratch – not the market value of your house and the land it sits on. Verify the amount your insurance company says is the replacement cost by having a home builder give you a separate estimate.

One study found that more than two-thirds of U.S. homeowners don’t carry sufficient insurance to pay for the replacement of their home. You don’t want to cut corners here.

Also make sure your insurance will cover the cost to replace the contents of your home with new items.

4. Shop around

For this year-end review, carve out a chunk of time to shop around for more affordable insurance. This can quickly be done on the Money Talks News Insurance page.

If you find a better deal elsewhere, ask your current insurer whether you can get a better rate. You may find you qualify for discounts you’re not aware of.

If you are considering switching companies, research the financial health of the new company. There’s no point in paying thousands in premiums and being unable to recoup any losses if you must file a claim. An analysis can be done through independent rating agencies, such as A.M. Best and Standard & Poor’s, and your state insurance department.

5. Inquire about discounts you may be eligible for

Although they vary by insurance company, you may qualify for discounts if you:

Those who are senior citizens or associated with certain professional organizations may also be eligible for discounts. Call your insurer to see what discounts may be available to you.

6. Secure your home with an alarm

A number of insurers offer discounts of at least 5 percent if your home is equipped with a smoke detector, burglar alarm or dead-bolt locks. This amount may increase to 15 percent or more if your alarm has active monitoring with dispatch capabilities, and your home contains a modern sprinkler system, the Insurance Information Institute says. (On a tight budget? See “20 Tips to Harden Your Home Security for Next to Nothing.”)

7. Remain loyal

The Insurance Information Institute also says that your insurance company may provide a 5 percent discount if you have been with it for at least three to five years, and 10 percent for six or more years. Although this incentive is enticing, it is still important to shop around annually to ensure you are getting the best price.

8. Review the policy limits

Be sure that your insurance is sufficient to cover the replacement cost of everything in your house, including valuables that become worth more over time. On the other hand, if you no longer own valuable diamond jewelry or an extensive collection of art, you no longer want to be paying for the extra coverage.

This year-end review is a good time to make sure your inventory of your possessions, including photos or a video, is up-to-date and saved somewhere outside your home – for instance, in the cloud. Don’t have an inventory of your possession? Compile one now.

9. Maintain good credit

Premiums may be higher or applicants may not even be eligible for homeowners coverage if they have poor credit scores. Check out these tips to improve your credit.

These are just a few ways to reduce your homeowners insurance premiums. If you have any additional tips, share them in the comments below or on our Facebook page.

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Comments & discussion

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  • Jason

    I agree with everything accept loyalty. I’ve found that loyalty doesn’t pay off for auto or homeowners insurance. Companies are willing to give a new customer a better deal to win business. We had our homeowners insurance with Allstate for 7 years and the premium increased every year despite the value of our house steadily dropping 30% due to the recession. The increases were only $20-$30 per year so I didn’t bother to take the time to shop around. That changed this past year when the bill came and our premium jumped from $800 to $1150! That was the kick in the pants I needed and now we have the same coverage with Progressive for $725 per year.

    • Kent

      I’ve switched several times. Progressive has good intro rates but they raise them. So far, Geico has been holding steady.

      • Jason

        We will see come April the new bill comes. Progressive can be as easily replaced as Allstate. Insurance is a commodity.

  • Paul Alldredge

    One thing to bring to any insurance agent when you want to check rates are the “deck sheets”. You get these with all the paperwork when you renew. If you can’t find them have your agent email them and share them with other companies if you want to do an apples to apples comparison. Any agent can come up with a lower fee schedule but they will change the coverage and deductibles. I check out my insurance company about every 3 years. You will be amazed what you can save if you do this. The first time I did it I realized a savings of $1,800.00 on all of my coverage when I examined the house, cars, boat and other policy stuff. If there is a significant difference give you agent the opportunity to keep your business and explain the difference or give you a good reason for not changing companies. Don’t feel bad if you do change, it is business and your money on the table.