A home is the most valuable thing most of us will ever own, and it’s filled with costly possessions. Insurance covers the value of the building — including upgrades — and our belongings.
But that doesn’t mean you have to overpay. Here are some proven techniques to lower your cost of coverage, along with new technology that will make the process quick and easy.
1. Finding the best deal
The first thing you should do, especially if you already have a policy, is make sure you’re getting the best possible deal.
Comparing insurance companies these days is a snap. Just click on either (or both) of these two new comparison tools. Both are unbiased, independent services that compare rates from lots of companies in one place, without a lot of manual input on your part and without annoying phone calls from agents.
Neither service costs a dime and both will shop your existing coverage in minutes. If you don’t yet have a policy, these sites will help you find the best deal.
And if you’re not happy with the prices you’re seeing, read on for some tips to slash them.
2. Increase your deductible
If you are willing to pay a relatively large amount of the cost to cover damages before insurance kicks in, your insurance will cost less — possibly substantially less — month to month.
For example, raising your deductible from $500 to $1,000 could slash your premium by 25%, according to the Insurance Information Institute. That’s a lot of savings, without taking on a lot of extra risk.
Afraid that you may not be able to afford the higher amount you would pay out of pocket in the event of an emergency? Beef up your emergency fund. That way, the money will be there when you need it.
3. Look into discounts on multiple policies
If you insure anything besides your home — such as a car — look into a multi-line discount. That’s a break that some insurance companies will give you if you buy multiple policies — such as homeowners insurance and auto insurance — from the same company.
4. Know what you’ll cover
You don’t necessarily need to insure a house for as much money as you paid for the property. That’s because the price you paid for your property includes the price of the land, not just your home.
In other words, you want sufficient insurance to cover the cost of rebuilding your home from scratch if it burns down or is blown off its foundation by a tornado. But your land can’t be incinerated into ashes or blown away, so you need not factor the value of your land into the cost of your homeowners insurance.
Just be careful: It is not unusual for homeowners to underinsure, and this isn’t a place to cut corners.
5. Ask about discounts
Although discounts vary by insurance company, you may qualify for price breaks if:
- Your home is equipped with a smoke detector or sprinkler system.
- Your home is protected by a burglar-alarm system or deadbolt locks.
- You have not filed a claim in a certain number of years.
- You don’t allow smoking inside your home.
- You are over a certain age.
Call your insurer to see what discounts might be available to you.
6. Get to know your agent
You know how local mechanics give you extra tips and service because they’ve gotten to know you through the years? Insurance agents have similar habits.
Your insurer may provide a discount on premiums if you have been with the company for several years. Although this incentive is enticing, it is still important to shop around annually to ensure you are getting the best price.
7. Value your possessions
Carry sufficient insurance coverage to cover the replacement cost of everything in your house, including items that increase in value over time. On the other hand, if you no longer own valuable diamond jewelry or an extensive collection of art or antiques, stop paying for the extra coverage.
An annual review of your policy is a good time to make sure your home inventory — including photos or a video of your possessions — is up-to-date and saved somewhere outside your home. For instance, save it in the cloud. Don’t have an inventory of your possessions? Check out “How to Create a Home Inventory in 6 Steps.”
8. Keep your credit score solid
If you have a poor credit score, you might be charged higher premiums or have a tougher time getting insurance coverage. If your credit has any room for improvement, check out “7 Ways to Boost Your Credit Score Fast.”