Maximizing Homeowners Insurance Savings

Engage with Your Insurance Provider

Start by reaching out to your current homeowners insurance company. They are often willing to assist you in finding cost-saving opportunities to retain your business. Explore available discounts for which you may be eligible, such as:

• Loyalty discounts for long-term customers
• Bundling discounts for holding multiple policies
• Special rates for association members
• Reduced premiums for retirees

According to the Insurance Information Institute, customers can save up to 15% on their premiums by bundling home and auto insurance policies with the same insurer.

Opt for a Higher Deductible

One of the most straightforward ways to lower your monthly premiums is to increase your deductible—the amount you pay out-of-pocket before your insurance coverage kicks in. For instance, if you incur $5,000 in storm damage and have a $500 deductible, you'll cover the first $500, and your insurance will handle the remaining $4,500.

However, a lower deductible like $500 could raise your monthly premium by approximately $20 compared to a $1,000 deductible. Over a year, this equates to an extra $240 paid to potentially save $500 during a claim. Unless you face frequent, significant damages, a lower deductible may not be cost-effective. By choosing a higher deductible, such as $2,500 or $5,000, you'll see a notable reduction in your monthly premiums.

To prepare for a higher deductible, consider creating a dedicated savings account. This not only provides peace of mind but also allows you to earn interest on your savings while enjoying lower insurance costs.

Insure the Structure, Not the Land

When insuring your home, focus on the building itself rather than the land it occupies. In most disaster scenarios, the land remains intact. If you purchased a home for $200,000 with the land valued at $30,000, you should insure the structure for $170,000. This distinction can lead to significant savings on your insurance policy.

Monitor Your Mortgage Insurance

Keep an eye on the principal balance of your mortgage. Once you've paid off 20% of your home's value, you can request the removal of mortgage insurance (distinct from property insurance) from your policy. If you initially made a 20% down payment or have a VA loan, you shouldn't need mortgage insurance at all.

Regular Policy Review

Before considering other insurance providers, implement these strategies with your current insurer. It's also wise to conduct an annual review of your policy to ensure you're not overpaying, to reassess your home's value against the principal balance, and to check for any new discounts that may apply.

By following these steps, homeowners can effectively manage their insurance expenses. According to a report by the National Association of Insurance Commissioners, the average annual premium for homeowners insurance was $1,249 in 2018. By applying these cost-saving measures, homeowners have the potential to reduce their premiums significantly.

Remember, insurance is a competitive industry, and companies are often willing to offer incentives to attract and retain customers. Don't hesitate to negotiate and compare rates annually to ensure you're getting the best deal possible. For more information on homeowners insurance and tips on saving, visit the Insurance Information Institute's website.