If you own a home, homeowner’s insurance is a necessity. Although it’s not required by law, if you borrow money to buy a home, your lender will almost certainly require that you have homeowner’s insurance to help them protect their investment.
Even if your house is completely paid off, it’s still a good idea to carry homeowner’s insurance to help protect your investment.
In either case, there are steps you can take to avoid overpaying for your insurance coverage.
Check out these tips to help ensure you’re paying the lowest possible rates:
1. Enhance your home security. A good home security system can help you save money on your homeowner’s insurance.
- One of the ways insurance companies determine your rates is to assess the amount of risk they take when they issue a policy. If you lower your perceived risk, you can also reduce your rates.
- Statistics show that homes with a security system are burglarized less often than homes without them. The insurance companies know this and they’ll offer you lower rates if you have a good security system.
2. Get a higher deductible. When you have a claim, your deductible determines how much of the loss you need to cover yourself. The more you agree to cover, the lower your insurance premiums are.
- Raising your deductible from $500 to $1000 can save as much as 25% on your premiums.
- Not many people would file a claim for $500 anyway, because they know that when they do, their rates are likely to increase. That’s another reason for bumping up your deductible.
3. Do you have too much insurance? Keep in mind that the amount of money you pay for your house isn’t necessarily the same as what it would cost to replace it. For example, if you bought your home for $250,000 and you have a $250,000 insurance policy, you’re probably paying too much for insurance.
- When you purchased your home, you were purchasing the land as well as the building. You already own the land so you only need enough insurance to cover the cost to rebuild.
4. Bundle policies and enjoy discounts. If you have more than one type of insurance policy with the same company, you may be eligible for discounts on each policy.
- An example would be if you had homeowner’s insurance, auto insurance, and life insurance all with the same company. If that were the case, you would likely be eligible for discounts on each policy.
5. Ask about other discounts that might be available. Most insurance companies offer a number of discounts based on varying criteria. Call your insurance agent and ask if you’re eligible for any discounts.
6. Shop around for the best deal. One of the easiest ways to save money on anything is to do some comparison shopping.
- There are countless insurance companies competing for your business. Whenever there’s more than one company offering the same product or service, you’ll find price discrepancies.
- By doing some comparison shopping, it’s easy to find a company that’s offering the coverage you need at the best possible price.
Following these tips will certainly save you some money. The amount you can save could add up to a pretty substantial amount. With a small investment of your time, you can have more money to invest elsewhere.