12 Ways to Lower Your Home Insurance Costs

A homeowners insurance policy is a vital piece of making sure your home is protected but it doesn't mean you need to pay a significant amount of money for it. There are key ways to lower your home insurance costs, saving you money in the long run.
By Jessica Moore
Updated Nov 2, 2022
ways to lower home insurance costs
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A home is one of the most significant investments you'll ever make. To protect it (and you) in the event of a storm, fire, flood, or other significant events, you need a homeowners insurance policy. Repairs are expensive, and your policy helps ensure you can get what you need to keep your home in good condition. 

Just because you need to have a homeowners insurance policy (especially if you have a mortgage on your home), this doesn't mean that you need to pay a significant amount of money for it. Different companies charge different prices, even for the same coverage, and several factors affect your total cost. Whether you're reviewing your current policy or looking for a new one, you might be wondering how to get the best price. This article will go over ways to lower homeowners insurance costs, helping you save money. 

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1. Know What Goes Into Determining Your Costs

The average annual cost for homeowner's insurance in the United States is slightly shy of $1,400 a year. While this might be the average, your price could be more or less depending on numerous factors. Some of the most common include:

  • Where you live

  • Your credit history

  • Your claim history

  • The age of the home

  • The size of the home

  • The types of coverage you have

  • Features of your home, such as a pool, trampoline, or storage shed

One significant factor that many homeowners don't know about is the claim history of the home. If the previous homeowner made a few claims in the past five to seven years, those claims could result in a higher premium. Insurance companies view the home as more of a risk than one that has a clean history. If you're shopping for a new home, check the CLUE database, or ask the seller to provide a report for you. 

2. Shop Around

Don't settle for the first insurance company you find. Doing so could result in paying more than necessary for vital home protection. Different companies charge very different prices, even for the same coverages. Before you buy a policy, shop around for quotes. You can call other companies and speak with a representative. Or, you can save time by using PolicyScout. You can shop rates for several companies at once, making the comparison a much simpler process. 

3. Ask About Discounts

Most insurance companies offer at least a few discounts to their customers. These might include such things as:

  • Claim-free discounts

  • Loyalty discounts

  • New home discounts

  • Living in a gated community

  • Being retired

  • Paying your premium in full

  • Being a non-smoker

You could be eligible for several home insurance discounts and not even know it. Don't be afraid to ask when getting quotes, as it could save you a lot of money in the long run. 

4. Exclude the Value of the Land

When determining how much coverage you need, don't include the value of your land. Your policy only covers what it would cost to rebuild your home and other structures such as sheds. Including the value of the land means you're going to be paying more than necessary. Another thing to consider is removing and old, dilapidated structures to save some money. 

5. Bundle Your Insurance Policies

Many insurers offer more than homeowners insurance. They might also provide car insurance, motorcycle, insurance life insurance, and even pet insurance. These companies often offer discounts for bundling your policies. If you have insurance policies with other companies, you may want to consider if bundling those policies under one insurer will save you money. 

6. Understand How Home Improvements Affect Your Cost

Older homes often have higher premiums because they're more of a risk to insure. You may lower your cost by performing home improvements such as replacing an old roof, windows, or outdated wiring can help reduce your risk of an issue. Find out if your insurance company offers discounts for such improvements. If they do, let them know about any modifications you make as soon as you make them. 

Keep in mind that not all home improvements decrease your home insurance premiums. Some may cause the cost to go up. For instance, building an addition increases your home's square footage, which then increases the amount of protection you need. A pool is another addition that increases how much you'll pay. If you decide to build one, consider adding a fence and lights (and forgoing the diving board) to decrease your overall risk. 

7. Raise Your Deductible

Your deducible is the amount you're responsible for before your home insurance coverage kicks in. A lower deductible means that you'll pay less out of pocket in the event of an incident, which can provide peace of mind after a stressful event. It also means you'll be paying more for your insurance premium. If you can afford a higher out-of-pocket cost, consider raising your deductible to reduce how much you'll pay each year for your policy. 

8. Increase Your Security

Homeowners insurance doesn't just cover the cost of damage due to events like storms and fires. It can also help you to cover the cost of damages and losses that occur as a result of a break-in or robbery. Increasing your security makes your home less of a target for would-be thieves, which means it also becomes less risky to insure. As such, you may be able to lower your home insurance cost. 

There are a few things you can do around your home to increase security. Measures to take include:

  • Installing a security system

  • Adding a fence around your property

  • Placing deadbolts on your doors

  • Installing smoke and carbon monoxide detectors

When it comes to security and fire systems, you have several options, some of which report directly to the police or fire station. These systems can be expensive, and not all of them qualify for a discount. Before you go out and purchase one, ask your insurance company which ones they recommend. 

9. Value Your Possessions

Your homeowners insurance policy doesn't just cover structural damage. It can also cover damages to (or theft of) the possessions you have inside your walls. When looking for a policy, or if your current policy is up for renewal, identify how much your valuables are worth, determining how much you'd need to cover the cost of replacing them. Some items, such as televisions and other electronics, you may be able to look up online to determine the value. Others, like jewelry, you may want to get appraised. Make sure to assess your valuables each year to ensure that you always have adequate coverage and that you're not paying too much for what you own. 

10. Maintain a Good Credit History

Your credit score plays a role in determining your insurance premiums. The lower your credit score, the more likely you are to pay higher costs for coverage. If you're shopping around for a new policy, make sure to check your credit history before you apply. You can get one free copy of your credit report every year. Take some time to go through it. Any inaccuracies can have a significant impact. If you do find anything amiss, dispute it right away. You can also take steps to improve your credit score (and lower your home insurance premiums), such as paying down debts, keeping credit card balances low, and making all payments on time.

11. Make Claims Only When You Need To

As previously mentioned, your claims history impacts your homeowner's insurance premiums. The more claims you make, the more of a risk you become. 

In general, any claims you make remain on your report for five to seven years. Even calling your insurer to discuss a potential claim but never actually filing it counts as a claim in your record. It is essential to decide if an issue with your home is worth reporting. If you can fix it yourself, cover the cost of hiring a professional, or the repair costs less than your deductible, don't call your insurer. Save those calls for when you need them. 

12. Take Care When Choosing a Pet

There's no denying that pets enrich our lives. As a homeowner, though, individual animals are considered higher risk than others and can therefore have an impact on your home insurance cost. 

When applying for coverage, companies will ask you if you have pets and what they are. If you have a dog, they'll ask for the breed. Certain breeds will mean you pay more for insurance, or the company will deny coverage altogether. Some insurers also won't provide coverage for certain types of animals, such as snakes. If you have pets (or plan on getting one), make sure that you know how it will impact your insurance first. 

Save Money Without Sacrificing Coverage

Homeowner's insurance may be a necessary cost for homeownership, but that doesn't mean that it has to be an expensive burden. Shopping around, asking questions, and knowing what goes into your price can help you secure the best deal.