5 Ways to Save on Your Homeowners Insurance – Business Insider

Insurance is a necessary cost of owning a home. It covers damage to your house due to fires, tornadoes, hail , and other catastrophic events, and it can protect you from liability if someone gets hurt on your property. 
But premiums on homeowner’s policies are rising. In 2021, most insurers saw growth in their premiums, with increases ranging from as little as about 1.5% to upward of 68% compared with 2020, according to S&P Global Market Intelligence. While having this coverage is critical in case of a disaster, overpaying for it is not.  
Before you can reduce your premium, you first need to determine the exact coverage your household and property require.
Typically, a home insurance policy will include the following basics:
You may also want to buy additional coverage for things like hurricanes, floods, and earthquakes. You’d typically use these if your region is at high risk of one of these events or if your mortgage lender requires it.
Quick tip: There’s no law requiring homeowners insurance , but your mortgage lender will likely require it. You’ll typically need a policy covering 80% to 100% of your home’s full replacement value. This ensures you can rebuild and protect the lender’s investment.
Once you have insurance, if your home or property gets damaged by a “covered peril” — an event specifically named in your policy — you’d file a claim with your insurance company. The insurer would then cover the costs to repair the damage, minus your deductible. 
The deductible is the amount you agree to pay out of pocket per claim. The higher your deductible is, the lower your premium will be.
Important: Covered perils generally include fires, hail, windstorms, explosions, riots, aircraft or vehicles crashing into the home, smoke, vandalism, theft, volcanic eruption, freezes, and falling objects. You may need separate coverage for events like hurricanes, floods, and earthquakes.
There are many ways to reduce your home insurance premiums, even as general insurance costs rise. Some strategies require updating your house or changing your policies, while others simply require a little extra research. 
These five strategies can help:
Premiums vary by insurance company, so it’s important to shop around and compare several options for your policy — every time you renew.
“It’s not uncommon for a home insurance premium to be over $2,000 with the first provider you quote, and less than $1,000 with the next,” says Ted Olsen, ​director at Goosehead Insurance
“Insurance providers know exactly what type of client they want to insure and the pricing is reflective of it,” Olsen says. “If the consumer doesn’t fit their target-market client, they will price themselves out of the running. If the consumer fits the profile they are hoping to insure, you will see very competitive pricing.”
To start price-shopping, you can contact insurers directly or use a third-party rate tool. You can also use an independent agent who isn’t employed by any specific insurer. They’ll prepare quotes on your behalf and help you choose the best one.
“With so many options, a consumer could exhaust hours of their time across multiple days just to get a half-dozen quotes back,” Olsen says. “Once they do get them back, it’s hard to compare them as each provider has its own way of describing common endorsements and the coverages can vary wildly. An independent agent can do all of the shopping for them and then help them compare the results and find the coverage that both protects them best and also fits the budget needs of their household.”
When you choose a higher-deductible policy, you agree to pay more out of pocket should an event occur. This reduces the risk for the insurer and results in a lower premium for you. 
If you do go this route, “be prepared to pay more in the event of a claim,” cautions Anthony Martin, chief executive officer of Choice Mutual, an insurance agency in Reno, Nevada.
This preparation might mean beefing up your emergency fund or funneling a small amount of each paycheck into a savings account just in case. You can also take out a credit card to use in emergencies, but be careful about wracking up debt unless it’s necessary.
Most insurers offer discounts for taking out multiple policies from them, a practice known as bundling.
The amount of the bundling discount depends on the company, but it typically ranges from 5% to 15%. To qualify, you usually need to have at least one other line of insurance with them. It could be your car insurance , life insurance, boat insurance, or any other coverage you may need. 
If you’re considering this option, get quotes for these other policies while shopping for your home insurance. You’ll want to compare both the cost and coverage of each.
Important: You may need to end an existing policy early to bundle with a new insurer. In most cases, the old insurer must refund you the remaining balance of your premiums.
In addition to bundling, insurance companies typically offer several other types of discounts. These often include:
There may be other discounts you’re eligible for, so be sure to ask the company or your agent for the full list of discounts they offer.
Reducing the chances of your home being damaged can lower your premium, too. To do this, focus on updating older systems, installing safety devices, or replacing more dated features with newer, less damage-prone ones.
Angel Conlin, chief information officer at Kin Insurance, recommends the following:
On top of these improvements, just taking good care of your house can help.
“Many homeowners, particularly first-time buyers, don’t realize home maintenance is something they’re expected to do when they buy a homeowners insurance policy,” Conlin says. “Most home insurance policies explicitly exclude damage from ‘neglect’ or ‘failure to properly maintain the property.’ What this means is that your insurance policy doesn’t cover things that fall apart because you didn’t take care of them.”
There are many ways to reduce your home insurance premiums. But remember, your policy exists to protect you — and your pocketbook — when something unexpected happens. Make sure you’re not taking unnecessary risks by lowering your premium and maintaining a healthy emergency fund just in case.
“The biggest strategy for reducing premiums is to focus not only on the initial cost but to think about what level of coverage will benefit you most in the long run,” says Steve Severaid, president of The Greenspan Co./Adjusters International.
“A bare-bones, cheap policy might save money in the beginning, but if a disaster strikes and much of the damage is not covered, it will end up being much more expensive than all the money saved by getting a cheap policy.”
If you’re not sure where to get started on your homeowners insurance search, visit Insider’s guide to the best homeowners insurance companies in 2022.

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