Homeowners insurance is one of those “necessary evil” expenses. If you own a home, you need homeowners insurance (if you have a mortgage, your lender will require it). Like all other insurances, my approach to them is to use it strictly for disaster scenarios and try to save as much money as possible on the annual premiums. That means getting the bare bones coverage and putting the money we save into a savings account where it can accrue interest.
The best example of this was with our car. My first car was an Acura Integra, I just had liability insurance and it saved me about a thousand dollars a year (I was much younger then and in a riskier demographic). I put that extra money into a savings account and was lucky enough to never need it. I did the same with my next car, again I was lucky enough not to ever need it and that account now has a few thousand dollars in it.
We do the same with our homeowners insurance though the difference in savings is not as significant. Here’s what we do to lower our premiums:
No discussion about insurance should start without this most basic of tips. The multi-line discount is the easiest way to save money on your insurance and it involves getting your auto, home, and any other policies (such as umbrella liability insurance) through a single provider.
Increase Your Deductible
We have a $1,000 deductible, the maximum we were allowed, on our home and that lowered our rate significantly. This one has the biggest impact because it has the biggest impact on what your insurance company pays out. If you have a $1,000 deductible, that’s a savings of up to $1,000 on any incident you might make a claim on. Not only that, but you probably won’t make any claims on all those borderline cases and that too saves the insurance company some cash.
That said, what is your deductible and what typically falls into that spectrum? How many claims have you had in the last 5 years that were in the $500 to $1000 range? We’ve had zero. In fact, we lived at our last house for 8 years and never made a single claim.
Add Home Security System
Much like an anti-theft device on your car, a home security system is an anti-theft (and early warning device if you tie it into smoke and fire detectors) device for your house. The cost savings, versus the monitoring costs, might be a wash but at least you get security in the process. Why not have the insurance company pay for (or at least subsidize) your home security system?
Check Memberships & Employer Discounts
Sometimes an insurance company will give you a discount based on your employer or if you’re affiliated with an organization. Many have lists of which employers and organizations are involved and sometimes you can join an organization for a small fee. When we were with GEICO, I joined the National Military Family Association in order to get a discount on our auto insurance. The NMFA go some dues and GEICO gave me a discount, a win win for all involved.
Ask Your Agent
Lastly, ask your agent if there is anything you can do to lower your annual premiums. Sometimes there are some simple things they can suggest that you never even knew were possible. It never hurts to ask!
Do you have a tip you want to add?
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