10 Ways to Lower Your Homeowner’s
Insurance Premium
Thanks to Mother Nature, homeowner's insurance premiums have been creeping up over the past few years. The insurance industry expects premiums to go even higher over the next
few years.
But that doesn't necessarily mean you need to keep paying higher rates. Here are 10 ways you can reduce your homeowner’s insurance premium:
1. Comparison shop against your current policy and rates. There are a number of ways to do this online. You can go to an insurance company’s website and check out prices, or you can go to any number of Internet sites that allow you to compare prices of several companies at once. Once you’ve narrowed down your choice, you can research a company’s financial well-being at sites like JDPower.com and at the Better Business Bureau (www.bbb.org).
“While the Internet has made shopping for insurance easier, don't use the Internet to find the lowest price possible,” says Carolyn Gorman, a vice president with the Insurance Information Institute. “Remember, you get what you pay for.”
2. Increase the amount of your deductible. But make sure you know how much cash you would be liable for in the face of a disaster or an accident, and consider keeping that emergency money in a separate checking or savings account.
3. Clean up your credit score. “In recent years, insurance companies have been using credit scores to set an individual’s premiums as [they] look at their business and see that people with poor credit histories have a higher claims history,” says Sandy Praeger, president-elect of the National Association of Insurance Commissioners and the commissioner of the Kansas Insurance Department.
Praeger recommends that consumers obtain a free copy of their credit report from AnnualCreditReport.com.
“Check your report to make sure it is accurate, as there are often mistakes,” she says.
People with lower credit scores have a higher claims history. So if you want to save money on your insurance premiums, clean up your credit.
To improve your credit score, Praeger suggests making credit card payments on time and limiting the amount of debt and the number of credit cards you keep. “Be responsible,” she says. There are also numerous websites and organizations that can offer you information on cleaning up your credit score.
4. Increase the safety and security of your home. Installing a home security system or dead bolts, for example, could lower your premium by 5 percent. Check with your insurance company to find out what you have to do to be eligible for the discount before making any changes.
5. If you are 55 or older, ask for an age-related discount. Insurance industry research shows that older consumers and retirees are less of a risk when it comes to homeowner’s insurance. And the same policyholders tend to take better care of their homes. “These folks have been responsible for saving for their retirement,” Praeger says. “They are good customers.”
6. Bundle your insurance policies with the same company. If you have some or all of your policies with one insurance provider, it may reward you with a discount of as much as 15 percent. Do the math to determine if that bundled price is less than the cost of separate policies from different companies.
7. Educate yourself. Find out if your insurance company offers classes—such as home safety courses—that you can take to get a discount on your premium.
8. Do not overinsure your home. New home costs often include the price of the lot that the home sits on. In the event of a fire or another disaster, it’s unlikely you will need a replacement for the lot. Instead, establish what it would cost to rebuild your home at today’s constructions costs, says Gorman. “And don't forget to consider what it would cost to replace all of your possessions.”
9. Make the effort to quit smoking. Nonsmokers receive a discount from homeowner insurance companies, as the risk of a fire from cigarettes is high.
10. Ask for a reward for being a good customer. If you have stayed with the same insurance company for a decade and you have not made a claim, you may receive a discount—say 5 percent—for being a faithful and careful policyholder.
Jim Sulski is a longtime Chicago-based writer who has contributed to a number of publications and websites, including Midwest Construction, Crain's Chicago Business, MSN.com, Chicago Social Magazine, The Chicago Journal, Success at Home, The Chicago Tribune and the Right at Home website.Association.