Getting insurance to protect your home works in mostly the same way as any other kind of insurance policy. If you pay an insurance company on a regular basis, they will provide you emergency financial aid in case something goes wrong with your home in the form of a peril (such as a fire, theft or a storm). However, also like other insurance policies, homeowners insurance can be quite expensive.
You will often have an annual cost to pay to receive homeowners insurance, which can take up quite a bit of your budget if you do not plan correctly. So, learning how to save money on these insurance policies is a great way to get the coverage that you need without breaking the bank.
What are some of the different costs in home insurance policies?
Before you can fully understand the best ways to pay less on your homeowners insurance, it is very important to brush up on a few key terms that are heavily used in this process. When you choose to pay for homeowners insurance, the yearly fee that the insurance company will be advertising to you is called the premium.
Homeowners insurance premiums are incredibly wide-ranging in their costs, as they are affected by many different factors. For example, each state in America regulates their own homeowners insurance market, which in turn establishes which companies can do business in which state, and how much on average customers must pay for their premiums.
These companies can also vary your premium costs, however, based on factors such as your home’s value, age, neighborhood and more.
Of course, premiums are the most apparent homeowners insurance costs, but they are not the only ones. Another important cost to keep in mind is your deductible.
This is the amount of money that you must pay before being able to gain access to your insurance coverage. Deductibles are important factors in homeowners insurance that often go overlooked, as they determine how much you will have to sacrifice out-of-pocket after you have had a home-damaging peril such as a fire or tornado.
Oftentimes, having a higher premium allows for you to have a lower deductible, and vice-versa. Choosing the right balance for you depends largely on how much you are willing to spend each year, versus the types of potential damage your house could face each year. For example, you may need additional coverage plans, like flood insurance, which will add to your overall insurance costs.
Why is it important to pay less on homeowners insurance?
One important thing that many consumers should remember is that the lower your monthly and annual insurance payments, the more money you have to put towards making your home and life better.
Nobody wants to pay a fortune on insurance, especially because it often seems like you are not getting any immediate benefit from it. However, that is not to say that you should underestimate the importance of having a quality insurance policy. Trying to get a good deal is an excellent idea, but you should never sacrifice the coverage that you need to feel protected from whatever may happen in the future.
Of course, the other side of the coin is that if you are not careful, your homeowners insurance premiums could easily rise over time. This can be due to inflation, structural problems in your home or even problems with burglary or fires in your neighborhood. Therefore, it can be a good idea to look for ways to lower your homeowners insurance premiums as a way to counteract those things that may not be fully in your control.
Top Five Tips for Saving on Homeowners Insurance
Buying homeowners insurance does not need to be a long and painful process, but you should go into it with a mission in mind, and guidelines to follow. Even if you already have insurance, there are certainly ways that you can save money by paying less than what you already do each year. Five of the best ways to save money on your homeowners insurance premiums include:
- Asking your insurer for discounts: You may be surprised how many businesses that you use every day have discounts that you are not currently aware of, and insurance is no exception. Some insurance companies offer discounts for retirees, buyers for newly constructed homes, returning customers who sign a new policy before their old one expires and more. However, they may not always mention them up front, so it is always best to ask what you could be missing out on before signing.
- Staying with the same insurer, and using them for multiple policies: Loyalty to an insurance company goes a long way in their eyes, so they are often quite happy to give reduced rates for long-term customers. Additionally, choosing to get your homeowners insurance, auto insurance and other policies from the same company can make life easier when it is time to pay, and even give special loyalty discounts if you ask for them.
- Doing small repairs by yourself, if possible: You have homeowners insurance for a good reason, which is to help protect your wallet if something happens to your home. But if your pipes start leaking or your drywall gets cracked, should you really have to go through the process of filing a claim and paying your deductible? Even if it is marginally cheaper to do so, filing too many claims can make you look like you are abusing the system, which insurers don’t like. This could lead to raised rates, if you are not careful. It is generally recommended to only file claims when you really need to.
- Raising your deductible: It may seem simple, but choosing to pay more on your deductible when you need to file a claim will in fact lower the amount of money you need to pay on premiums every year, and sometimes by a wide margin. It can be risky to do so, especially if you feel as though you may need to file multiple claims in the near future. But if you go long stretches without needing to utilize your homeowners insurance, it may be smart to pay less now, and more later on.
- Keeping a good credit score: In some ways, insurance is not too different from credit. By trusting you to use it responsibly on rebuilding your home, insurance companies are willing to give you large sums of money in return for regular payments. But if your credit score is bad, that can reflect poorly on your reliability in paying your debts on time. This information is collected by insurance companies before you sign with them, and it plays a huge role in determining your premium costs. By having a good credit score (and even improving it further over time), you can slowly lower your premiums.
Keeping this information in mind can take some time, especially if you have yet to choose the insurance company that is right for you. However, taking the time to make the right decision can make all of these tips easier to accomplish, until you are paying the low premiums that you desire for quality homeowners insurance.