6 Strategies to Save on Home Insurance Premiums

6 Strategies to Save on Home Insurance Premiums

Recent years have seen an unprecedented number of climate and weather events in the United States. In 2023 alone, there were 28 separate weather-related disasters, each causing over $1 billion in damages. This surge in catastrophic events has led to a significant increase in home insurance claims, a trend that experts predict will continue. Compounding this issue are rising construction labor and supply costs, making home repairs more expensive and driving up insurance premiums. In 2024, Bankrate reports that premiums have increased by an average of 23%, following double-digit hikes in the previous year.

In high-risk areas, the situation is even more dire. Some insurers have exited these markets entirely, while others have dramatically raised their rates. For homeowners, comprehensive insurance is essential for financial security, but the steep rate hikes can make homeownership financially burdensome and can complicate home sales, as obtaining affordable insurance becomes a hurdle.

While these trends might seem daunting, there are effective strategies to manage and reduce your home insurance premiums without compromising necessary coverage. Here are our top six tips:

1. Shop Around

Just as you would for any major purchase, getting multiple quotes for home insurance is a smart move. Aim to review at least three estimates before deciding on a policy. You can obtain quotes directly from insurers or through an independent insurance broker. Provide detailed information about your property and claims history to get accurate quotes.

Carefully read the policies to understand what each one covers and its limitations. Consider how much the policy will pay for repairs or replacement, and check caps on personal possessions and liability claims. Reviews from policyholders on sites like Trustpilot and ratings from organizations such as the Better Business Bureau and J.D. Power can also provide valuable insights.

For assistance in selecting the right policy, feel free to contact me for a list of trusted insurance professionals.

2. Increase Your Deductible

Your deductible—the amount you pay out of pocket before insurance kicks in—significantly affects your premium. Lower deductibles, such as $500, result in higher premiums, while higher deductibles, like $2,500 or $5,000, lower your monthly costs. Some policies allow for different deductibles for specific claims, such as those related to natural disasters.

If you have enough savings to cover a higher deductible in the event of a claim, this can lead to substantial long-term savings. For instance, raising your deductible from $1,000 to $2,500 could save you an average of 11% annually.

3. Bundle Multiple Types of Insurance

Insurers often offer discounts if you bundle home and auto insurance policies. Bundling can save you between 10-25% on premiums, and adding more policies, like RV, boat, jewelry, or life insurance, can increase your savings. Bundling also simplifies your paperwork and might allow you to pay a single deductible for multiple claims from the same event.

However, always shop around before committing to a bundle, as it isn’t always the cheapest option. Ensure the bundled coverage meets all your needs.

4. Ask About Available Discounts

Insurers offer various discounts that you might not be aware of. For instance, nonsmokers often qualify for lower rates due to a reduced risk of home fires. Discounts may also be available for military families, certain professions, recent homebuyers, opting for paperless billing, or paying premiums annually.

Since discounts vary by insurer, ask a representative for a comprehensive list to see what savings you might qualify for.

5. Avoid Making Small Claims

To keep your premiums low in the future, avoid making claims unless absolutely necessary. Many insurers offer discounts for policyholders who remain claim-free for several years, while multiple claims can lead to significant premium increases or even nonrenewal of your policy.

For minor damages, such as a few missing shingles, consider paying out of pocket instead of filing a claim. Always review your policy before filing; even denied claims can count against you.

For minor repairs, we can recommend affordable professionals.

6. Be Strategic About Home Improvements

Home improvements can affect your insurance premiums. Upgrades that enhance safety or reduce risk, such as updating electrical or plumbing systems, installing security systems, adding fire sprinklers, or replacing the roof, can lower premiums.

Conversely, upgrades that increase your home's value or risk, like installing a pool, expanding living space, upgrading materials, or adding a fireplace, can raise premiums. Inform your insurer about any changes to avoid coverage gaps, and consult us before starting renovations to understand their impact on your premiums and property value.

Bottom Line: Protect Your Investment Without Sacrificing Home Enjoyment

Balancing comprehensive coverage with affordable premiums can be challenging, especially in today’s climate. However, it’s crucial not to skimp on insurance. Consult a knowledgeable insurance professional for advice tailored to your specific needs. We can connect you with trusted advisers and offer a free consultation on how home renovations might affect your property value and insurance premiums.

The above is for informational purposes only and not intended as financial, legal, insurance, or tax advice. Consult appropriate professionals for advice tailored to your needs.