Refinancing Tips: Top Ten Ways to Save on Homeowners Insurance

Posted by  on Mar 29, 2010

If you're re-evaluating your homeowners policy, here are ten key ways you can save on your premium while still ensuring that your investment is covered adequately.

1. Shop--Every Year

Look at pricing, of course, but also consider the quality of service you expect if you need assistance in filing a claim. Check with friends and consumer resources for service ratings. And talk to insurers--ask them what they would do to lower your costs.

Verify the financial stability of the companies you are considering with rating companies such as A.M. Best and Standard & Poor's, and consult consumer magazines. Narrow the field to three insurers, then get price quotes.

2. Increase Your Deductible

Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. If you can afford to raise your deductible from $500 to $1,000--that is, if you can absorb up to $1,000 loss out of pocket--you may save as much as 25% on your premium.

3. Don't Insure the Sales Price, Insure to Rebuild

The land under your house won't be stolen, blown away, or burned. So don't include its value when buying home insurance. If you do, you may pay a lot more than you should.

4. Get the Multiple-Policy Discount

Some insurers take 5% to 15% off your premium if you buy two or more policies. But make certain this combined price is lower than buying the different coverage from different companies, or all your policies from a new company.

5. Master Disasters

Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters, and see what discounts you'd be eligible for if you take those steps.

6. Be Secure

You can usually get discounts of at least 5% for a smoke detector, burglar alarm, or deadbolt locks. Some companies offer to cut your premium by as much as 20% if you install a monitored sprinkler, fire, and burglar system.

7. Find More Discounts!

Retired people or those in professions and industries such as science, the military, or teachers may score reductions of up to 10% at some companies. Some employers and professional associations offer group insurance programs with special rates.

8. Take Credit

Establishing a solid credit history can cut your insurance costs. Insurers often pull credit information to price insurance policies.

9. Loyalty Pays

If you've been with a company for several years, you may receive a special discount. Some insurers will reduce their premiums by 5% if you stay with them for three to five years and by 10% if you remain a policyholder for six years or more.

10. Give Your Policy a Checkup

Make sure you cover any major purchases or additions to your home. But don't spend money for useless coverage. If your five-year-old desktop computer is no longer worth the $5,000 you paid for it, reduce or cancel your excess coverage and pocket the difference.

Refinancing is about more than getting the lowest mortgage rates. Compare mortgage rates, but also look to lower the other costs of home ownership. The best mortgage rates plus the best homeowners insurance equals the most savings.


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