Inflation is a prominent discussion point as we near the end of 2021, as some consumer goods have reached historically high price points.
Lost in the shuffle: Home insurance premiums are also sky-high after huge increases in the last few years.
Tips To Lower Your Home Insurance Premiums
According to the Wall Street Journal, nationwide premiums increased 11.4% on average between 2017 and 2020, about 3.5% more than inflation during that same period.
Prices have increased at an even faster pace this year, rising 25% or more in parts of California and Florida.
The average annual homeowners insurance premium in the United States is now $1,398.
Lumber costs have risen 42% since September 2017. A higher volume of natural disaster claims, supply chain shortages and other homebuilding materials going up in price are among the factors pushing up insurance costs, the Wall Street Journal reported.
Fortunately, there are ways you can lower your home insurance premiums. Keep reading to see which of these may apply to you.
Table of Contents
- Raise Your Deductible
- Avoid Making Frequent Small Claims
- Bundle Your Home and Auto Coverage
- Shop for the Best Rates
- Protect Against Damage by Fortifying Your Home
- Avoid Certain Items and Pets
- Consider Trimming the Fat
- Improve Your Credit Score
- Ask About Lesser-Known Discounts
1. Raise Your Deductible
The simplest way to lower your home insurance premium may be to increase your deductible.
If you accept more risk before the insurance company takes responsibility, you could lower your monthly premiums immediately — potentially by a healthy amount. Deductibles of $500 or $1,000 are considered low.
It's important to consider how much you have saved in your emergency fund.
If you raise your deductible, it’s a good idea to make sure you have cash immediately available to cover any emergency expenses such as a leaky, storm-damaged roof.
2. Avoid Making Frequent Small Claims
There’s a second benefit to increasing your deductible.
A history of frequent, pesky small claims can wreak havoc on your monthly premiums. Raising your deductible and paying for smaller things out of pocket can be a nice preventive measure.
Your claims history follows you from carrier to carrier. So if you get labeled as someone who files frequent claims, even if they’re small, it may be hard to keep your annual costs reasonable.
3. Bundle Your Home and Auto Coverage
You may be able to get a discounted rate just by purchasing your coverage from the same company that provides your auto insurance.
4. Shop for the Best Rates
We all live busy lives. When you get a few free minutes, the number one thing on your list probably isn’t to shop around to see if you can save a few bucks on your home insurance.
That extra effort can pay off, though. And when it compounds over months and years, a small amount of savings can add up.
If you live in an area that isn’t subject to hurricanes or wildfires, it may be especially helpful to look for a carrier that doesn’t write policies in those areas. There’s been a sharp increase in claims in places prone to that sort of damage in recent years, according to the Wall Street Journal.
5. Protect Against Damage by Fortifying Your Home
It may seem counterintuitive at first, but sometimes the best way to lower your insurance rates is to spend money upfront upgrading your home.
The Wall Street Journal report cited a couple in Melbourne, Florida, with rapidly increasing premiums on their 2,450-square-foot home. They were paying $5,596 a year as of 2019.
The couple spent about $3,000 installing a hurricane-resistant garage door, hiring an inspector to document that their roof was in compliance with strict local business codes and upgrading some windows. Their annual premium immediately dropped by about $3,000, so they made their money back within the first year.
Some home additions that can potentially lower your premiums (check with your provider):
- Smoke detectors
- Burglar alarm
- Sprinkler system (for fire)
- New roof
- Storm shutters and/or window upgrades (to guard against wind damage)
- Updated cooling and heating systems
6. Avoid Certain Items and Pets
Pools and trampolines are huge hits with kids and can be part of many people’s idea of a dream home. However, they can cause your insurance premiums to spike.
The same goes for certain dog breeds such as Rottweilers and pit bulls.
You shouldn’t have to guess. Ask your insurance provider for the price difference if any of this applies to you.
7. Consider Trimming the Fat
Even if you’re not trembling over your insurance cost, you should talk to your insurance representative every year or two to go over your plan.
Make sure you know what coverages you’re paying for. And consider whether there’s anything you can do without.
This goes back to something I wrote earlier: If you’ve done a good job at building an emergency fund, you may be well-positioned to pay out of pocket rather than rely on insurance for certain portions of your current policy, especially if your potential liability is relatively small.
8. Improve Your Credit Score
In some states, insurance companies adjust their rates based on your credit score. As is the case with many other things, you’ll get the best rates on insurance if you maintain a good credit score.
9. Ask About Lesser-Known Discounts
Some insurance companies offer lower rates to non-smokers, those who accept paperless billing and those who set up automated payments, among other things.
In some cases, you have little choice as a consumer when prices rise. Fortunately, there are some levers you can pull if you want to lower the cost of your home insurance. Hopefully, this article has given you a few ideas.
As with most things in life, operating from a place of financial strength (good credit score, strong emergency fund) and doing your homework are key.
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