7 Ways to Cut Home Insurance Bills

Wednesday, April 9, 2014

Home motion sensorHome insurance is a crucial part of being a responsible homeowner. While those who already own their homes outright aren't legally required to purchase home insurance, this insurance product is vital because it protects you against fire, water damage, theft and liability. You certainly shouldn't go without home insurance, but there are some things that you can do to make your home a smaller risk for insurance companies, which may reward you for your efforts with smaller premiums.


1. Ask for a Credit Check

If you always pay your loans and bills on time, then your credit should be in pretty good shape. According to The Globe and Mail, many home insurance companies will offer discounts to homeowners with good credit, because they believe that they are less likely to make an expensive claim. This is sensible, as responsible borrowers tend to be responsible in other areas of their lives. If you have good credit, call your insurance company and ask them to do a credit check on you - it may pay off.

2. Increase Your Deductible

Your deductible is the amount of money that you have to pay out of pocket for a claim before your insurance kicks in. The standard deductible for home insurance is usually between $500 to $1,000, but it can vary significantly. Most homeowners only rarely make a home insurance claim, particularly a large one, which means that it may be worth it for you to ask your insurance provider about increasing your deductible, according to CBS News. While you will have to pay slightly more for a large home insurance claim if you increase your deductible, you will most likely be paying less overall because of the decreased premiums. The most important thing is to choose a level of coverage that works for you.

3. Bundle Your Insurance

Most providers of home insurance also provide auto insurance, life insurance and a variety of other products. Even if you have a slightly cheaper rate for one of these products with a different insurer, you can save significantly by bundling your policies together with the same insurer. The discounts can be significant, because insurance companies want to motivate you to do more business with them.

4. Get a House Alarm

Getting a monitored house alarm to warn you and a security company of potential break-ins, fires or floods can save you on home insurance as well. If your provider knows that you have a good system in place, you present a significantly smaller risk - making you less likely to file a claim. According to The Globe and Mail, you may get a discount in the neighborhood of $100 per year. That won't pay for the security system, but it will help mitigate the cost, which may make a security system worth it to you on top of the added peace of mind.

5. Avoid Making a Claim

This may seem counter-intuitive, but not making a legitimate claim can sometimes be the best course of action - if you've never made a claim before. Many home insurance companies offer a "claims-free" discount, which can be significant. If you're looking at making a smaller claim, consult your home insurance bill first to find out how much you're saving every year with this discount. If the discount adds up over a few years to more than you anticipate getting in the claim, it may be worth it to simply pay for it out of pocket.

6. Don't Let Your Coverage Lapse

If you let your home insurance expire or cancel it before you get new insurance, it can end up being extremely expensive. There are fees and higher premiums associated with coming back from no-coverage, because you represent a higher risk. Letting your coverage lapse looks irresponsible, and worse, companies wonder what went wrong that is leading you to get new coverage. If you're shopping for new insurance, make sure that you do not cancel your old policy first.

7. Look For Other Discounts

There are a couple of small discounts that you may qualify for as well. If you are over the age of 55, for example, your age qualifies you for a small discount in the eyes of many home insurance companies. So does living near a fire hydrant in some cases, or in an area with a professional fire department, according to CBS News.

Even something as simple as paying annually instead of monthly or signing up for electronic billing can entitle you to a small discount, because you are saving the company money in administrative costs. Finally, renovating your property - especially to update features like the roof, electrical wiring or the plumbing system - can save you money if you tell your insurance company because of the lower risk that you represent.