Insurance is a necessary cost of owning a home. It covers damage to your house due to fires, hail damage and other catastrophic events, and it can protect you from liability if someone gets hurt on your property.
Homeowners policy premiums are increasing across the board, due to multiple factors. Knowing exactly how much coverage your home needs is the first step towards reducing your premium.
How homeowners insurance works
The first step is determining the exact coverage your household and property require. Typically, a home insurance policy will include the following:
- Dwelling coverage: this protects your home’s structure- its roof, walls, floors, and anything permanently attached to it.
- Other structures coverage: this extends to other structures on your property, including detached garages, sheds, barns, and swimming pools.
- Personal property coverage: personal property refers to your belongings in the home and other structures on your property.
- Liability coverage: this protects you if someone is injured or their property gets damaged at your home. It covers legal fees, medical bills, and other associated costs if someone sues you.
- Additional living expenses coverage: also called loss of use, this covers additional expenses as a result of a claim if your home becomes uninhabitable and you must live elsewhere while it’s repaired.
Five strategies to lower your homeowners insurance premium:
- Shop around for the best insurer and compare quotes. Bonus: use a broker who will do all of this for you!
Premiums vary by insurance company, so it’s important to shop around and work with an expert who can compare options for you. As an independent agent who isn’t employed by any specific insurance company, my loyalty is to you and finding you the company and coverage that is the best for you. Endorsements and coverage vary wildly from policy to policy, so an expert will highlight the differences and prepare a fair comparison on your options.
- Increase the deductible
Choosing a higher deductible policy means you agree to pay more out of pocked should an event occur. This reduces the risk for the insurer and results in a lower premium for you. Understand though, this means you need to be prepared to pay more in the event of a claim.
- Bundle your homeowners and auto insurance (and additional policies as well)
Most insurance companies offer discounts for taking out multiple policies from them. This practice is known as bundling your insurance. The amount of the bundling discount depends on the company and to qualify you usually need to have at least one other line of business with them. These discounts can add up, depending on what other coverage you may need – for instance boat insurance, umbrella insurance, motorcycle insurance, and more.
- Make sure you’re getting all other available discounts
In addition to bundling, insurance companies offer several other types of discounts, including: autopay, paperless, home safety, loyalty, senior, and claims-free discounts. An agent will seek out and apply all applicable discounts to your policies.
- Update your home
Reducing the chances of your home being damaged can lower your premium, also. Focus on updating older systems, installing safety devices, or replacing more dated features with newer ones that are less damage-prone. Recommended updates include: fixing or replacing your roof, installing an automatic water-shutoff system, upgrading your HVAC, electrical, and plumbing systems, or a security system.
The bottom line is that there are many ways to reduce your home insurance premiums. Your policy exists to protect you should something unexpected happen. Make sure you’re not taking unnecessary risks by lowering your premium and maintaining an emergency fund just in case. Above all, your best strategy is to work with a broker who knows your insurance company and coverage options and will work for you to find you the most competitive insurance coverage and premium.
To review your insurance coverage email kate@fdinsurancegroup.com to start the conversation.