5 Ways to Save Money on Home Insurance

Money Girl tells you how to get the best rate on home insurance and 5 tips to save money.

Laura Adams, MBA
5-minute read
Episode #341

5 Tips to Save Money on Home Insurance

Savings Tip #1: Raise Your Deductible

Your deductible is the amount you have to pay for a covered claim before your insurance company gives you benefits. It typically applies to property claims, but not for liability. Also, depending on where you live, you may have an additional deductible for a specific natural disaster, such as a hurricane or hail storm.

For instance, let’s say you have home insurance with a $500 deductible and make a claim for a kitchen fire that will cost $20,000 to repair. You’ll have to pay $500 and the insurer would pick up the rest of the cost, by sending you a check for $19,500.

An insurance deductible and your rate works like a seesaw. When your deductible goes down, your premium or rate goes up. And the same is true in reverse, when you increase your deductible, your premium goes down.

So, use this strategy to save money, but don’t raise your deductible so high that you’d get yourself into financial trouble if you actually had to make a claim.  

See also: What Is a Deductible?

In addition to improving your overall personal finances, establishing a good credit history will cut your insurance costs.

Savings Tip #2: Maintain Good Credit

Many consumers don’t realize that credit is a factor in how insurers evaluate you. The vast majority of carriers, in most states, use a credit-based insurance score to set your rates for both home and auto insurance.

Insurers have found that policyholders with poor credit tend to make more claims. So they increase your rate to adjust for that potential future risk. That means in addition to improving your overall personal finances, establishing a good credit history will cut your insurance costs.

Some simple strategies for improving your credit include paying all your bills and credit accounts on time, never maxing out credit cards, and checking your credit report on a regular basis to correct errors that may be hurting you.

For more information about how to increase your credit score and check your credit, download the Credit Score Survival Kit, a free video tutorial.

See also: What You Should Know About Credit-Based Insurance Scores

Savings Tip #3: Bundle Your Insurance

Most companies that sell home insurance also sell other kinds of policies, such as auto or life insurance. If you purchase more than one type of insurance from a carrier, it may qualify you for a discount that could be as much as 15%.

However, you still need to compare prices and make sure that a bundled price is really lower than buying separate policies from different insurers.

Savings Tip #4: Ask for Discounts

And speaking of getting a price break, if you’re not getting all the home insurance discounts you’re eligible for, you’re paying too much. Here are some examples of discounts that can cut your rates:

  • Living near a local fire department
  • Having safety devices, such as a security system and deadbolt locks
  • Having a history of being claims-free
  • Having an impact-resistant roof
  • Making home renovations, such as installing new wiring
  • Installing sensors that detect gas or water leaks
  • Not smoking

Note that the insurance discounts you’re eligible for vary by company and the state where you live.

Savings Tip #5: Shop Around

Insurance rates vary considerably from carrier to carrier, even for the same property. And as I mentioned, so do the discounts that different companies offer. So your best defense is to shop around on a regular basis.

If you already have a home insurance policy, let your agent know that you’re looking for the best price to see if they can cut your rate. Sometimes, sticking with your current insurer qualifies you for a loyalty discount.

However, until you shop around you simply won’t know if a better deal is out there. It’s easy to get free quotes with no obligation at sites like insuranceQuotes.com and netquote.com. They match you with the top nationwide carriers who write policies in your ZIP code.

No matter what, take a few minutes each year to compare the price you’re paying for home insurance to brand new quotes.

Get More Money Girl!

There’s a huge archive of past articles and podcasts if you type in what you want to learn about in the search bar at the top of the page. Here are all the many places you can connect with me, learn more about personal finance, and ask your money question:

Click here to sign up for the free Money Girl Newsletter!

Download FREE chapters of Money Girl’s Smart Moves to Grow Rich

To learn about how to get out of debt, save money, and build wealth, get a copy of my book Money Girl’s Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite book store in print or as an e-book for your Kindle, Nook, iPad, PC, Mac, or smart phone. You can even download 2 free book chapters at SmartMovesToGrowRich.com!

Family in a house an home protection images courtesy of Shutterstock.


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.