Low-Income Homeowners Insurance

Learn more about the best home insurance options for homeowners on limited budgets.
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Ross Martin

Insurance Writer

  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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Renata Balasco

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Renata joined The Zebra in 2020 as a Customer Experience Agent. Since 2021, she has worked as licensed insurance professional and content strategist.…

Insurance options for low-income homeowners

The costs associated with purchasing and maintaining a home can be substantial, and insurance is often a big contributor to those costs. As a house is one of the primary investments many people make, it’s very important to keep your dwelling protected. But what about those homeowners with lower incomes?  

Insurance costs may seem hard to cover, but there are many ways for homeowners to find affordable home insurance coverage. Keep in mind that not paying your premiums can lead to having your insurance policy canceled, leaving you and your home completely unprotected. Regardless of your financial situation, many insurers and state and governmental agencies are willing to assist. Review the following guide to assess the insurance options available to low-income homeowners.

Key takeaways:

  • Income level doesn't affect your insurance rates
  • The best way to save money on home insurance is to shop around
  • Most states have a FAIR program that offers affordable rates to low-income homeowners

Does annual income impact my insurance premium?

Income level rarely contributes to the amount you pay for homeowners insurance. However, income-related metrics can certainly play a part in determining your premiums. For example, those with lower incomes may be more likely to suffer from poor credit or own a home in an area that home insurers classify as “high risk,” which can lead to premium hikes. Insurance companies may consider customers with lower credit ratings as more likely to file claims, leading to more expensive rates. 

One of the most important factors that insurers use to help determine your rates is your ZIP code. If your home is located in an area with high property crime rates or at significant risk from natural disasters, you can expect your premiums to be more expensive. Other factors that determine home insurance rates include your home's building materials, its age and its proximity to a fire station.

How low-income homeowners can save on insurance premiums

Below you’ll find a number of methods that low-income homeowners can use to find suitable home insurance coverage. Not all methods may be available through all insurers, but these options can provide a good place to start.

Bundling home and car insurance

Look at bundling your home and auto insurance with the same insurance company. Having multiple policies with the same insurer can lead to savings and streamline your monthly bills. (It should also be noted that being a homeowner is likely to decrease what you pay for car insurance.)


Seek out insurance discounts

Most insurance companies offer some form of discounts for qualifying customers. Some examples include discounts for loyalty, occupation, or for upgrading parts of your home such as your roof. Contact your insurance agent to make sure that you are benefiting from all available homeowners insurance discounts offered by your insurer. 


File claims carefully

Your insurance history plays a major role in the premiums that you are charged. If you have filed a number of claims in the past, it's likely that your insurer will find you to be more likely to file claims in the future. This means that you can expect your rates to rise. As such, carefully consider when to file an insurance claim and when not to, as claims can raise your rates dramatically for years to come. 

Home and automobile

Know the difference between replacement cost vs. actual cash value

The way a homeowners insurance company pays out for claims can have an impact on your premiums. The two primary valuation methods are replacement cost value (RCV) and actual cash value (ACV). Replacement value will payout enough to cover the full cost of replacing your home or personal property. Actual cash value factors in depreciation when paying out a claim, often leading to a much lower payout. While your primary dwelling will almost always be valued at replacement cost, your personal property can vary depending on your policy.

If your personal property coverage pays out at replacement cost, you may consider downgrading to actual cash value if your insurer offers that option. You won’t get as much of a payout if you have to file a personal property damage claim, but the savings in downgrading from replacement cost coverage could ensure that your coverage remains in place. 

Downsize your coverage

While being somewhat underinsured is bad, it’s far better than having your coverage dropped altogether. Look at the coverage options offered by your insurer to see if there are any add-ons that you no longer need. Most of your policy info can be found on your declaration page. These may include endorsements that protect a home business or offer protection against cyber attacks. 

Consider what is absolutely necessary when making such decisions. The type of coverage that you choose will have an impact on your rates. Some home insurance policies offer much more robust coverage (HO-3 and HO-5) than others (HO-2). Your insurer may have a package or policy type available that is more in line with your budget. 

Personal Property Limits

You may also have some leeway in your policy’s coverage limits. For instance, if you had set your personal liability coverage limits at a higher level than required, reducing them to the minimum amount required may provide some small savings. 

Also, if you have endorsements for certain expensive items, have them reappraised to ensure that you aren't overpaying for coverage.

Reassess your dwelling limit

What you paid for your home and the cost to rebuild it are two separate things. Remember that part of your purchase cost includes the land on which your home sits. Your dwelling limit should only be high enough to cover the cost to rebuild your home. Work with local contractors or insurance agents to work out local building and material costs to make sure that you aren't overpaying for your coverage.


Improve your home security

While this may entail an initial investment, home security systems or other improvements can often lead to savings on your insurance. The Insurance Information Institute states that some insurers will offer savings of up to 20%[1] for the additions of certain security or monitoring systems. If nothing else, they can help protect against having to file a costly homeowners theft claim.

Smart Home

What if I can’t make my home insurance payment?

If you find yourself unable to make your payment, contact your insurance agent or a representative of your company to inquire about a grace period. Many insurance companies will discontinue coverage between 10 to 30 days after a missed payment. Consult your insurer to confirm the duration of the company's grace period.

It’s crucial to work with your insurance company to make your payment: non-payment may result in the cancellation of your policy. Even a short lapse in coverage can have major consequences. Along with penalties and higher home insurance costs, you may face the prospect of a house fire or other damaging peril while uninsured, leaving you on the hook for all repairs.

Can I pause my insurance payments?

It’s not likely that a homeowners insurance company will allow you to stop paying your premium while maintaining coverage. Failure to make payments can lead to the insurance company dropping your coverage.  For some homeowners, this could also break the terms of their home loan, which may require an active home insurance policy remain in place as a part of their lending agreement. 

Communication is critical in this situation. Some insurance companies may be willing to work with you to adjust your payment plan, especially in light of the COVID-19 pandemic. As a result, a number of insurance companies have put measures in place to assist those struggling to make homeowners insurance payments. Consult our COVID-19 resource page to find out more about some of these programs. 

Can my lender require me to carry home insurance?

Unlike auto insurance, there are no legal requirements to carry homeowners insurance. However, your bank or mortgage lender can most certainly require you to carry insurance coverage as a part of your lending agreement. Your lender has an insurable interest in the property, and therefore may set minimum coverage limits (especially for your dwelling coverage) to which your policy must adhere. Before purchasing your home insurance policy, check your lending agreement to ensure your new policy meets these requirements. 

If you are unable to meet certain financial requirements — or your policy is canceled — your lender can impose insurance coverage on your behalf. See below scenarios in which such coverage is required.

Force-placed homeowners insurance

Most lenders require homeowners insurance to be carried as a part of the loan agreement. If you let your current homeowners policy lapse or drop it altogether, your lender may find out. In this case, the lender can purchase home insurance on your behalf and simply tack it onto your mortgage payments, leaving you little choice but to pay it or risk losing your home. The lender has this ability because they hold an insurable interest, meaning they could lose money by financing an uninsured property. 


Private mortgage insurance 

Buying a home often requires a large down payment. This can sum can be tricky to gather up, especially for low-income or first-time homeowners. However, opportunities exist to get a home loan with less than the suggested 20% downpayment, though it may come with some additional costs. 

Borrowers who are unable to make a downpayment of at least 20% are often required to carry private mortgage insurance. This coverage is not meant to protect you or your home, but is designed to protect the lender in the event you are unable to pay your mortgage. This is usually paid via monthly premiums, but other options may be available through your provider. Once you have paid enough on your loan to reach 20% equity, most lenders will allow you to drop this coverage. 

Home with blue roof

What if my homeowners insurance deductible is too high? 

For those in precarious financial situations, the deductible can be a two-edged sword. Carrying a higher deductible can lead to lower insurance rates, making it easier to make your payments. However, in the event of an insurance claim, you will be responsible for pitching in to pay more to cover damages. In the event of a payout, those with a $2,000 deductible would have that amount deducted from their claims check. For example, if you suffer a $20,000 loss, your home insurance company would only pay $18,000, leaving you responsible to make up the difference out of pocket. 

Of course, while a higher deductible can lower your payments, it's crucial that you are actually able to pay it in the event of a serious claim.

Government insurance programs to help low-income homeowners

Some homeowners may benefit from government programs when struggling to find adequate coverage. For homeowners who are continually denied coverage from standard home insurance companies, you may want to consider your state’s Fair Access to Insurance Requirements (FAIR) Plan. This is a government-run insurance program that allows “high-risk” homeowners access to insurance coverage. 

These policies are not as robust as typical homeowners insurance policies and should be considered a last resort. If you are uncomfortable with the lower amounts of coverage that these policies provide, seek out supplementary coverage or consider non-standard home insurance companies that may offer policies to higher-risk customers. 

Insurance considerations for low-income homeowners

For those in tricky financial situations, homeowners insurance can seem like one more burden in running your home. However, even if you have paid off your mortgage and own your home outright, dropping homeowners insurance is never a good idea. Home coverage isn’t required by law, but dropping it altogether leaves homeowners at a huge risk of losing one of the biggest investments you’re ever likely to make. 

At the end of the day, the best way to cut homeowners insurance costs is to seek out a new policy altogether. Home insurance companies each have their own underwriting policies, meaning that one company could offer significantly cheaper rates than another in your area. Compare home insurance quotes from a number of companies to see if they can offer savings. The Zebra is a great place to find free insurance quotes from many of the best homeowners insurance companies in the nation.

Compare home insurance rates side-by-side and find an affordable policy.

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About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
  • The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.