Tips for Lowering Homeowner’s Insurance Premiums

franklins_lg Homeowner’s insurance costs can vary by hundreds of dollars a year, depending on the insurance company you buy your policy from, but there are other ways you can lower the price, too. Here are a dozen tips from the Insurance Information Institute:

SHOP AROUND: It will take some time, but comparison shopping is worth the effort. Ask friends and check consumer guides and online insurance quote services. Price isn’t the only factor; consider an insurance company’s reputation for customer service. The California Department of Insurance’s website has several helpful resources, including an insurance-coverage comparison tool and a consumer-complaint summary.

RAISE YOUR DEDUCTIBLE: The higher your deductible, the more money you can save on premiums. Most insurance companies recommend a deductible of at least $500; if you can afford to raise your deductible to $1,000, you may save as much as 25 percent.

UNDERSTAND REBUILDING COSTS: The land under your house isn’t at risk from theft, windstorm, fire, and the other disasters covered in your homeowner’s policy. So don’t include its value in deciding how much insurance to buy to avoid higher premiums

MULTIPLE POLICIES, SAME INSURER: Some companies that sell homeowner, auto, and liability coverage will deduct 5 to 15 percent off your premium if you buy multiple policies. But do the research to confirm this is actually true.

MAKE YOUR HOME DISASTER-RESITANT: Find out from your insurance company how to make your home more resistant to windstorms, earthquakes, and other natural disasters. You may be able to save on your premiums by retrofitting areas of your home such as the roof; foundation; and heating, plumbing, and electrical systems.

BOLSTER HOME SECURITY: You may get discounts of 5 percent or higher for a smoke detector, burglar alarm, or dead-bolt locks. Some companies will cut your premium by as much as 15 or 20 percent if you install modernized alarm and sprinkler systems.

ASK ABOUT DISCOUNTS: Companies offer several types of discounts, but that varies by firm and state. For example, since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner, too. If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

KEEP YOUR CREDIT IN CHECK: Insurers are increasingly using credit information to price homeowners insurance policies. In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied.

STICK IT OUT: If you’ve kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. But periodically compare this price with that of other insurers.

REVIEW THE VALUE OF YOUR POSSESSIONS YEARLY: You want your policy to cover any major purchases or additions to your home, but don’t spend money for coverage you don’t need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies, such as expensive jewelry, high-end computers, and valuable art).

IN A GOVERNMENT PLAN? LOOK FOR PRIVATE INSURANCE: If you live in a high-risk area — say, one that is especially vulnerable to coastal storms or wildfires — and have been buying your homeowner’s insurance through a government plan, you should check with an insurance agent or contact the state Department of Insurance for other options. You may save some cash in the private market.

WHEN BUYING A HOME, CONSIDER THE INSURANCE COST: You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional fire department. It may also be cheaper if your home’s electrical, heating, and plumbing systems are less than 10 years old.

(Photo: Flickr/Ervins Strauhmanis)