8 Tips to Save Money on Homeowner’s Insurance
As a mortgage professional over the past 3.5 decades, I have been amazed by the wide
variance of what people pay for homeowner’s insurance! I have seen hundreds of
dollars difference for the same type of home. Here are some things you can do or
consider to save money on this required insurance.
1) Shop Around
First and foremost, shop around! Ask your friends who they use, contact your
state insurance department, ask your Realtor and Loan Officer, use online quote
services. Compare prices and coverages (Make sure you are comparing apples
Don’t just look at the lowest price. You are purchasing insurance to cover you in
the event of a problem. If you have the lowest price but they don’t help you, what
good is that. I once had a claim denied when my neighbor’s spigot flooded my
basement. My company didn’t help at all and washed their hands of the matter.
Needless to say, I no longer have my business with this company. After months
of work, I got the neighbors insurance to finally pay. The NAIC (www.naic.org)
has information, including complaints you can investigate. On line reviews are
another method to make sure you have a good balance between price and
2) Raise your Deductible
A deductible is the amount you have to pay before the insurance company steps
in. Deductibles typically start at $250 and go up. Increase your deductible to
$500 and save up to 12 percent. Increase to $1000 and save 24 percent.
$2500 and save 30 percent. A $5000 deductible would save up to 37%
Do realize that Fanniemae and Freddiemac, the agencies that do most loans in
America have maximum allowable deductibles of 5% of the face amount of the
3) Buy more that one policy with the same insurer
Many companies that sell homeowners, auto and liability coverage will take 5-10
percent off your premium if you buy two or more policies from them. But you will
need to compare the different prices
4) Make sure your home is better prepared for disasters
You should be able to get discounts of at least 5% for smoke detectors, burglar
alarms or dead-bolt locks. Some companies give a substantial discount for
more sophisticated sprinkler systems or alarms that ring at a monitoring facility.
You may also be able to get lower premiums by adding storm shutters,
reinforcing your roof or buying stronger roofing materials. Older homes can be
retrofitted to better withstand earthquakes by strapping their water heater down
5) Don’t insure your land…it doesn’t burn down.
Make sure your quotes are for the home only, not the land. Your land can’t burn
down, be stolen or fly away in a windstorm and doesn’t need insurance. So,
don’t include it in the value in deciding how much coverage to get
6) Protect and improve your Credit Score
Obtaining and keeping a good credit score can cut insurance costs. One trend
in the industry is for homeowner’s insurance policies to be priced according to
credit score. Evidently there is a correlation between how you pay your bills and
how you responsibly keep your home safe. Pay your bills on time, don’t
overextend, don’t maintain balances to a high percentage of your credit limit.
Check your credit at least once per year and correct any issues.
7) Check private insurance if you are on a government plan for coastal
storms, fires and crime.
8) Ask your potential insurer what other discounts might be available
Many companies have found their own discounts due to statistically analyzing
their losses. Ask every potential insurer what other discounts are available.
There are many differences between carriers. For example, some insurers give
a discount to retired people.