The purchase of a home is the most significant investment most people will make in their lifetime. And the expense of the property itself is just the beginning. With all the added costs – including interest, property taxes, mortgage insurance, and more – it’s only natural to want to save money on homeowners insurance.
For some, this leads them to question the need. After all, homeowners insurance isn’t legally required by any federal or state law. So, is it really necessary?
Yes, it is.
If you have a mortgage, lenders will typically require it to protect their investment. Even once your mortgage is paid off, homeowners insurance can still offer valuable protection for what’s likely the single largest component of your financial portfolio.
True, homeowners insurance adds one more expense to an already crowded list of home-buying costs. But, several proven methods can help you lower your premiums.
More on that in just a second…
WHAT AFFECTS HOMEOWNERS INSURANCE RATES?
According to Insurance.com, the average yearly home insurance premium in the United States is about $2,779. But that varies according to several factors. When calculating premiums for a particular region, insurers consider things such as location, exposure to risks (like damaging weather), proximity to fire departments, the age of the home, and even things like the presence of a wood-burning stove or fireplace.
Premiums are higher in states like Florida and Texas, where homes are at a much higher risk of damage from storms and flooding. By contrast, with its steady tropical climate, Hawaii has the lowest premiums.
WAYS TO LOWER YOUR PREMIUM
Granted, many of the factors that will impact your insurance rates are outside of your control. However, there are still several steps you can take to save money on homeowners insurance.
1. Shop around for policies
Shopping around for policies is an important step since costs can vary quite a bit between companies. Compare a variety of insurers to best match your budget – but don’t let cost be your sole deciding factor. Consider a company’s customer service record – especially important if you ever need to file a claim.
How quickly do they respond? How well do their customers rate them?
We know…we know… calling countless companies and providing detailed information eats up valuable hours. That’s where it helps to work with a trusted advisor like Health & Benefits Partners. Thanks to our affiliation with Goosehead Insurance, we can help you significantly streamline the “shopping-around” experience.
2. Bundle policies
Companies that offer several types of policies (like auto, home, and life insurance) generally offer discounts when you bundle. These discounts can add up – and by bundling, you can simplify your claims process and insurance proceedings. Handling multiple policies throughout the year can make it hard to stay on top of payments. But bundling can save time and money and cut down on headaches.
3. Look for discounts
Most home insurance companies offer discounts to their customers – it’s just a matter of asking. A few common deals include those based on age, military service, home security systems, new appliances, home improvements, and more.
4. Raise your deductible
Your deductible is what you pay out of pocket when you file a claim. After you pay it, your insurance company recoups the rest. The higher your deductible, the lower your monthly premium. But, that doesn’t mean you should max out your deductible just to save money in the short term.
Remember – you’ll still need to come up with the full amount in case of a claim. According to the Insurance Information Institute, home insurance deductibles apply each time you file a property damage claim— effective in most states. So find that sweet spot between saving money on your premium and keeping a “rainy day” fund (quite literally!).
5. Improve your credit score
Many people are surprised to learn the role their credit score plays in the cost of their premiums. Insurance companies use it to predict how likely you are to make a claim. The fact is, home buyers with high credit scores receive better quotes. So if yours is low, take steps to repair it. If there are factors out of your control – like identity theft – consider working with a credit repair company.
THE BOTTOM LINE
Buying a home is a significant financial undertaking – particularly when you factor in all the unexpected “extras” accompanying it. You can, nevertheless, take steps to save money on your homeowner’s insurance.
As part of our recent partnership with Goosehead Insurance, Health & Benefits Partners now makes it easier than ever. If you’d like to learn more, reach out today.