How To Save On Homeowners Insurance

With the economy in the dumper, it seems like everyone is looking for ways to save on everything. Not wanting to stand in the way of this lovefest for saving, we’re proud to bring you six ways to save on homeowners insurance from Smart Money:

* Maintain a healthy credit score
* Inquire about discounts
* Increase your deductible
* Disaster-proof your home
* Monitor neighborhood changes
* Pay promptly

Simple tips for sure, but they can save you a bundle. Heck, the first tip alone can save you almost half on your homeowners insurance.

A few other worthwhile thoughts:

* Be sure to shop around every year or two for all your insurance needs. Many insurance companies slowly raise fees to the point where their competitors offer much cheaper options. And yet most consumers don’t look around for alternatives because the increases are so gradual. Doing a little extra work to check prices can save you a boatload in premiums.

* If you raise your deductible, be sure to increase the amount in your emergency fund to cover the difference. This way, if you ever need to make a claim you’ll have enough to cover your larger-than-average portion of the bill.

* Paying promptly is not only a good money saving tip, but can also keep your insurance from being canceled. Be sure you are never late on any sort of insurance payment or you could find your coverage dropped.

6 Ways to Save on Homeowners Insurance [Smart Money]

FREE MONEY FINANCE (Photo: Groovnick)

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  1. AMetamorphosis says:

    I can’t believe this tip was missed:

    Get your auto & home owners insurance policy from the same provider and they will usually give you anywhere from 10 – 20% additional off the bill

    • CFinWV says:

      @AMetamorphosis: This. It’s hard to believe but the total cost for my house+auto is not much higher than it was for just my car. Even the agent was floored. I took that savings and had an alarm installed, further lowering my payment. That discount pretty much ended up covering the costs of the alarm each month.

      • Veeber says:

        @CFinWV: It was kindof weird for me too. My car and my wife’s car were insured separately. After we bought our house and moved everything together the total with comprehensive for both cars (I was originally liability only) ended up being less than my individual insurance. It helped that I moved out of the city too, but it was really amazing how much the difference can be.

    • new2this says:

      You’re correct. I just switched over to a new provider, and by moving both auto and home, I am saving over $40 a month. Sounds teeny, but it makes a difference.

  2. Michael says:

    I know my insurance company gives a huge discount, something like 15%, for simply paying 6 months/year in advance. It would have cost us something around $300 more every six months just for sending a bill. Obviously, this isn’t possible for everyone, but if you can, I’d suggest it.

  3. anonymouscoworker says:

    Some states will allow you to skip mortgage insurance if you mortgage less than 80% (or some other number) of the value of the house. So if you put 20% down, you can skip mortgage insurance. Or you can put 5% down and your lender can then split your mortgage to two different mortgages at 15% and 80% and viola, you don’t pay any mortgage insurance.

  4. aloe vera says:

    I recently started allowing my insurance company to collect payments through direct debit – this saves me monthly service fees plus they give a 7% discount on both my homeowner’s and auto policies.

    Bonus – it lowered my mortgage payment as well since it was previously being paid from escrow.

    • greggen says:

      @aloe vera: My insurance charges me monthly fees ($1) to do a direct debit. Plus the added goodness of taking 6 months to fix the screwups to my policies whenever I make a change.
      If I did not have the accident forgiveness & longtime policy holder discounts (which no other insurance company can even come close to) I would drop em in a second.
      StateFarm sucks

  5. Samets says:

    I was always curious about how much to insure for.
    There also seems to be different terms for same or similar coverages from different insurers…

    • JeffIowa says:

      @Samets: Most insurance companies would like you to insure the property at the replacement cost of the structure. There are regional price differences in labor rates and materials, but in the midwest I use a general rule of $100 per square foot for replacement cost calculation. So a 1400 square foot ranch would cost approx $140,000 to replace. This is a worst cast scenario, of couse.

      You can insure the structure for less if your company allows it, but if you don’t check with them first and you have lower coverage than is necessary, you can see a penalty at claim time (see coinsurance clause.) Some agents don’t know the difference between appraised value and replacement cost (they rarely match.) Do your homework and talk to an independent agent, it will be worth it in the end.

      For information on independent agents, look to the national Independent Insurance Agent and Broker’s website, http://www.IIABA.net.

  6. RevRagnarok says:

    Missed option: Look into alternatives. My mother-in-law swears by hers: [www.1794insurance.com] It’s some kind of co-op where you leave a crapload of money in their account and they pay all claims off of pooled interest… My credit union (holding my mortgage) said no. She’s had it for at least 30 years.

    • mrmysterious says:

      @RevRagnarok: That’s pretty neat, never heard of it before. The credit union should be for it since it pretty much is the credit union philosophy (which they don’t follow anymore).

    • samurailynn says:

      @RevRagnarok: That sounds great… too bad I live in Oregon. I don’t know if my mortgage company would go for it either though.

  7. xkaluv says:

    Get a great rate on your home owners: Before you buy a home, when you are renting, get renters insurance. Most insurance companies consider that “homeowners” and will start your clock of claim free insurance from the date you get it.. even if you don’t own a house until later!

    • oneandone says:

      @xkaluv: Good to hear! I noticed that my renter’s insurance was officially titled a ‘homeowner’s insurance’ on the policy, so I called to clarify things what was going on, and they said pretty much the same thing. Nice to hear this could end up as a discount later.

  8. _NARC_ says:

    The first tip does not apply for those that live in MD — where insurers cannot use credit scores as the basis for preferential (read: discriminatory) pricing.

    Sucks though, because my insurance would be lower if they would.

  9. Norcross says:

    This is great for a lot of people, but many living in states such as Florida, there aren’t options. I had to carry Citizens insurance (which is the state-run company), since no other company are writing policies in my county. At all. To anyone.

  10. Anonymous says:

    If you have your Mortgage company hold impounds, Put the funds in an account where YOU can keep the interest. Then use a debit card to pay online and save a stamp also!

  11. theblackdog says:

    Tip #7, if you’re eligible, use USAA as your carrier.

  12. downwithmonstercable says:

    Are these things really worth doing? My homeowner’s insurance is somewhere around $150 a year, and we have good coverage. Of course, we don’t have to worry about hurricanes, tornadoes, earthquakes (for now) and other natural disasters.

    • LiveToEat says:

      @downwithmonstercable: I live on the Mississippi Gulf Coast. My homeowners is $2,600 a year and that’s just for fire and theft. Wind insurance (tornados & hurricanes) is another $2,000 a year. Since I live a few miles off the actual coast my flood is only $300 a year. My home is 1500 sq ft and I bought it for less than $200k.

  13. JeffIowa says:

    (Full disclosure, I’m an insurance agent)
    If you have a bad driving record, a renters policy can give you a multi policy discount that sometimes exceeds the cost of the policy. So, you pay 1800 every six months for your car insurance, you pay 150 a year for the renters, and you save 10% off each for having two policies with the same company. The renters pays for itself and then some.

    And with renters insurance, it’s not what you would do, it’s what the other tenants do that should have you concerned. If your neighbor torches the building, their renters insurance would pay for your stuff. But if they don’t have insurance, and you don’t have insurance, you’re SOL. And at $15 a month, why not?

    • Powerlurker says:

      @JeffIowa:

      I fully agree. Renter’s policies are really cheap. Since I’m still under 25 I get screwed on insurance, but at least my multiple policy discount is greater than the cost of my renters policy ($88/yr for $25,000 replacement value coverage).

  14. jdmba says:

    Beware of any solution of “put your home and auto on the same policy.” Before taking such a step research (and research again and again) to make sure that a claim on one (like your auto insurance which is very likely to result in a claim) will not result in a premium increase across the board (making your home insurance MUCH more expensive).

  15. Illiterati says:

    When I first bought home insurance, the agent asked how far the house is from a fire hydrant. At the time it was about half a block. The town’s about to put one right smack in front of the house–this post has me wondering if that’ll improve my rate?

  16. balthisar says:

    Most of us probably have mortgages where an escrow is still required (you know, given the age of internet demographics). So, no late payments.

    (Not critiquing, just pointing it out.)