As inflation soars, a global recession looms and climate change-related severe weather conditions become more common, home insurance rates are only expected to rise. Great news, right? Unfortunately, if you own a home, and especially if you owe a mortgage, you still will need to pay to insure it. But how do you navigate availing a cost-effective insurance rate? We've got some tips.
Workable tips to reduce your home insurance premiums
Table of contents:
Shop around and compare quotes
There are a few things to consider before purchasing a home insurance policy. This includes: what kind of coverage you need, how much you're willing to pay, and which company offers the best deal. It's important to shop around and compare rates from at least three different insurers every year or two. Comparing homeowners insurance rates will ensure that you're getting the best quality insurance at the best price.
Increase your deductible
An insurance deductible is basically the amount of money you are responsible for paying out of pocket if you make a claim. It's not the same as an insurance premium. In fact, deductibles and premiums have an inverse relation. A higher proportion of deductible will potentially reduce your premium. However, you need to be mindful of having enough savings to cover your deductible should you experience a loss.
Bundle your coverage
Got a car? Some insurance companies give a 5 to 25 percent concession off your premium if you go on to purchase two or more policies from them. Bundling insurance policies is a win-win situation for both you and the insurer. The insurer gets more of your business while you save on your premiums. You may want to look into buying home insurance and auto coverage from the same insurance company to save on both.
Avoid switching insurance companies halfway through the policy
When you get frustrated with your insurance company, it can be tempting to leave in a dramatic fashion. However, it's usually best to wait until your insurance policy is up for renewal before switching to a new company. That way, you can avoid any cancellation penalties. Additionally, there may be hidden fees associated with switching insurers, such as losing a multi-line discount or forfeiting other rewards. So before making the switch, be sure to understand all the potential costs involved.
Build up your credit score
Having a good credit score is important not just for getting loans and lines of credit, but also for getting better insurance rates. Many homeowners insurers use credit scores as one of the factors to determine what premium rate to offer someone. Generally speaking, the higher someone's credit score is, the lower their insurance rate will be. Insurance companies may deem people with low credit scores as higher risk, which could make it harder for them to get insurance coverage on the private market.
Maybe this one's on your 2023 New Year's Resolutions list already! If so, here's one more reason to quit the habit: If you smoke at home, it’s considered a fire hazard. Being a non-smoker means that you are less likely to cause an accidental fire. So, inform your insurer if you are a non-smoker because some companies offer a 5 to 20 percent discount on your home insurance. However, this discount only kicks in if everyone living in the residence is a non-smoker.
Keep your home in good shape
As a responsible homeowner, you know that regular maintenance on your property is key to preserving its value. Not only does this keep your home in good condition, but also helps to lower your insurance rates. By staying on top of things and taking preventive measures, you can avoid costly repairs down the road – and save yourself money in the process. So don’t neglect your home – make sure to give it the TLC it needs
Invest in smart technology
One way to save money on home insurance is to install smart-home devices. These devices can help prevent claims by catching problems early. For example, installing door sensors can help prevent burglaries. About 34% of burglars enter through the front door, so this is an important entry point to secure. Door sensors can give you peace of mind and potentially save you money on your insurance premiums.
Replace plastic hosing with braided steel hosing
Poly B pipes, also known as polybutylene pipes, have been commonly used in homes built between the 1970s and 1990s because they are cheaper and easier to install than copper pipes. However, recent years have seen an increase in insurance rates for homes with Poly B piping, as these pipes are less durable than copper and tend to break from the inside while appearing normal on the outside. This can lead to undetected leaks which, over time, can cause extensive water damage, mildew growth and even the spread of black toxic mold – posing serious health risks for you and your family. As a result, the presence of Poly B plumbing in your home can significantly raise your insurance rates.
Explore potential discounts
Discuss with your insurance representative if you qualify for additional discounts. These could be:
As a retiree, you may be eligible for discounts of 10 to 25 percent off your home insurance premiums. To qualify, your home must be your permanent residence and you or your spouse must be aged 55 or over. Retirees often spend more time at home than working people, so they are more likely to spot potential hazards like electrical fires, gas leaks or burst pipes before they cause serious damage.
Different insurance companies offer different loyalty discounts, but generally speaking, you may be eligible for a discount after being with the same company for a few years. To get the loyalty discount, you usually need to have been in good standing with your insurance company (no major claims). Some companies offer a 5 percent discount after three years, and others may offer up to 10 percent after five years.
Gated community credit
Many home insurers reward a 5 to 20 percent discount for a secure location. If your home is in a gated community, the additional security will repel the chances of vandalism and theft.
Claims free discount
If you have a clean record and no homeowners claims for 10 years, you could receive up to a 10 percent discount on your home insurance.
Mortgage free discount
The benefits of being mortgage-free might just extend to your insurance. Tell your provider if you manage to pay off your mortgage, especially if it’s much earlier than expected.
While homeowners insurance prices likely aren't going down in 2023, there are steps you can take to keep your monthly payment more affordable while still maintaining the coverage you need.
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