Annual homeowners insurance premiums in the U.S. have risen steadily over the past decade, according to a 2018 report from the National Association of Insurance Commissioners. In 2008, the average was just over $800; today, it’s almost $1,200.
So, whether you’re seeking coverage for the first time or have had the same insurer for years, it pays to look for ways to lower your premium. Raising your deductible is often standard advice, but there are additional steps you can take to help trim the cost of this essential protection.
Review these tips to help ensure that your premium is accurate and affordable—and that you’re getting all the discounts you deserve.
1. Bundle up. Insurance companies usually offer multi-policy discounts for insuring both your home and car with the same provider. Some insurers also extend this “bundling” discount to motorcycles, boats, RVs and even life insurance. And according to a 2017 study by InsuranceQuotes and Quadrant Information Services, those savings can add up to an average of $322 (a discount of 16.1%) per year. Of course, that’s an average, and discounts can vary depending on where you live.
2. Exclude land value. While land value is included in a home’s market value (what you paid for the property), it shouldn’t be included in the amount of insurance you buy. If it is, you’ll be paying a higher premium than you should be. Bottom line: Land can’t be stolen or permanently destroyed, so make sure your insurance covers only the replacement cost of your home’s structure and its associated systems, fixtures, and finishes.
3. Improve safety and security. Home security systems, smart-home systems, smoke detectors and fire alarms all improve home security because they alert homeowners and first responders to harmful situations. Insurers may reward these types of protection with lower premiums. But because there are big differences in detection and reporting capabilities—from motion sensors to Internet-enabled whole-house systems—always check with your insurer before purchasing a system to learn whether it qualifies for discounts.
4. Boost disaster resistance. No home is disaster proof, but it can be made more disaster resistant. You can learn whether your area is at higher risk for tornadoes, hurricanes, wildfire, floods, hailstorms and more by entering a zip code at DisasterSafety.org, a free tool of the Insurance Institute of Business and Home Safety (scroll down to the map).
Remember that flood insurance and earthquake damage aren’t covered by standard homeowners policies; they must be purchased separately. To find out if your property is in a flood zone, go to www.floodsmart.gov/why/all-about-flood-maps. For earthquake zone information, visit www.fema.gov/earthquake-hazard-maps.
Then, based on any specific risks you face plus your insurer’s guidance, consider targeting home improvements to reduce those threats. For example, these types of things may earn premium discounts (but always ask your insurer first):
- Installing fire-resistant landscaping to reduce wildfire risk
- Strengthening the roof to withstand heavy snows
- Adding storm shutters to protect windows against high winds in areas vulnerable to hurricanes
- Modernizing heating, plumbing and electrical systems to current codes
For new homes or remodeling plans, choosing the right building materials can also have an impact on rates. To improve flood-resistance, for example, your insurer may recommend ceramic tile with water-resistant mortar, concrete, or another nonporous material for first-level flooring.
5. Update your insurer about life changes. As aspects of your life change, ask your insurer if they affect your cost. Here are four life events that may trigger a rate reduction:
- Marriage. Married couples historically file fewer claims than singles, so insurers take marital status into account when setting rates.
- Retirement. Homeowners age 55 and over may spend more time in their homes once they’re no longer working all day and may also spend more time maintaining their homes. This means they’re more likely to spot and correct risks — such as a dead tree leaning over the house — sooner.
- Quitting smoking. Nonsmokers may also qualify for discounts, as the risk of unintentional fires is reduced.
- Raising your credit score. Insurance companies recognize a measurable trend where those with higher credit scores tend to be more responsible with their property. That can translate into lower premiums.
6. Tap professional perks. See if you’re eligible for group discounts. Employers and industry associations often partner with an insurer to offer low-cost coverage through an affinity discount. For example, NEA Member Benefits partners with California Casualty to offer an educator-friendly auto and home insurance program that features summer and holiday skip-payment options, as well as several discounts. You can also add earthquake insurance and flood insurance to your policy.
7. Buying a house? Check claims history and location first. A Comprehensive Loss Underwriting Exchange (CLUE) report details the insurance claims history on a property for up to seven years. Checking this report may alert you to issues that may make a home you’re considering more expensive to insure.
Location also influences risk and therefore insurance costs, too. Rates will vary by region and even by neighborhood. For example, you may pay less for insurance if the house you buy is closer to a fire hydrant and a fire department. And living within a gated community may also reduce premiums slightly due to the extra layer of security at entrances and exits.
Reassess your policy regularly
By reducing risks and working with your insurance agent to secure all the benefits and deductions available to you, your premium savings could add up.
Reviewing your policy annually at renewal time is also a wise step; you’ll want to reevaluate coverage limits and reappraise the value of your possessions. Taking these steps will provide your insurer with valuable updates that may qualify you for additional discounts — taking your rate even lower.