Five tips for lowering your insurance premium, the smart way
The saying goes, you can’t get rich overnight, but you can make intentional choices about your spending to save more of your hard-earned income. While you never want to skimp on your insurance coverage, there are simple and practical ways to decrease your premium.
You could live in a brand-new house, without valuable possessions in isolation with no children or pets, in the middle of nowhere but next to a fire department. (Ba dum tss!)
Jokes aside, and because that scenario is neither practical nor simple, let’s walk through some steps to assess your current insurance situation so you can confidently protect your home and personal belongings – and save a little green. Here’s what you can do.
Eliminate attractive nuisances
That’s insurance-speak for dangerous conditions. These dangers and other labilities can cause your insurance premium to be higher. In most cases, to enjoy the perks of a pool, you pay a higher premium. But in other situations, you may be able to make changes to your property that will have a significant impact. Do you have a pool with a diving board, but the kids have all grown and so it goes unused? Consider having the diving board removed. Trampoline? You’ll pay a higher premium for one, but you’ll pay an even higher one if the trampoline isn’t secure. Assess your property and work with an insurance professional to make your home safer and less costly to insure.
Practice good homeownership
All homes require maintenance, but good home maintenance goes beyond the bare minimum. When it does, it can impact your insurance premium. In addition to general house upkeep, consider having your roof inspected annually. Taking this step can uncover damage before a leak starts. If you have a home with siding, make sure there are no missing pieces or opportunities for exposure to the elements or critters.
In addition to maintenance, carefully consider changes to your property. Adding things can sometimes cause damage in addition to providing protection. A pool cage sounds like a good idea, but if it isn’t secure it could come loose during a windstorm and cause additional loss.
If you’re hiring someone to help with your home maintenance or improvements, be sure they are licensed professionals. Some insurance policies may not pay a claim if the damage was caused by an unlicensed contractor.
Make improvements that matter
Sure, it might be nice to add something shiny and new to your property, but if you’re looking to benefit from the investment when it comes to your insurance, a few improvements will qualify.
If you live in an area where disaster is prone to strike, you may be able to lower your premium by making your home more impervious to catastrophes. Changes could include storm shutters, impact windows or a reinforced roof. A home security system is another improvement that has the potential to reduce your premium. A safer home is less likely to be a target for theft. Some fire alarm systems and leak detection devices can also mitigate loss. Not all security or loss mitigation systems will affect your premium, and some can be costly to install, so be sure to work with your insurance company before making this type of improvement. No matter what improvement you make, check that your policy adequately covers your replacement costs.
Know your credit score can impact rates
More and more insurance companies are using credit score as an indicator of responsible homeowners who maintain their properties. If you’re thoughtfully considering some of the improvements and steps above, chances are you qualify as a good homeowner who is in a good position to receive the lowest rate already. Sometimes though, a life event comes along that can impact your credit. Be aware that if this happens it could change your premiums.
Increase your deductible
Your insurance deductible is the amount of money you are responsible for paying before your insurance company pays the remaining portion of the claim. Higher deductibles allow you to have lower premiums. According to the Insurance Information Institute, most insurance companies recommend a deductible of $500, but, if you can afford to increase your deductible to $1,000 it could save you as much as 25 percent on your premium.1 If you live in a coastal market, your insurance company will likely have separate deductibles for windstorms or hurricanes, if you live out West, wildfires. Assess your comfort level with the risks and if you’re able to pay out more at the time of a claim, it could ultimately put money in your pocket in the long run.
The best way to keep insurance costs manageable: avoid having a claim. A claim may increase your policy significantly – up to 50 percent or more for years. Some claims are unavoidable, but when precautions and preventions can be taken, do so. Include in your home maintenance items that can reduce your chance of loss. Cut down trees that aren’t healthy or are too close to your home. Overhanging trees can reduce the life of your roof and may cause damage. In a wildfire area clear brush and trees away from the home to provide a defensible space between your house and a fire. Clean gutters, replace wood mulch with fire-resistant stone and have pine needles or leaves removed from the valleys on your roof.
Having insurance only matters if it provides you the peace of mind that your home and possessions can be restored if the worst disaster happens. Skimping on coverage will make your rate lower, but you won’t have the coverage your need to rest easy at night knowing you’ll be protected. If lowering your homeowners insurance premiums is on your list to tighten your spending, make responsible changes. Eliminating dangers on your property, maintaining your home and making insurance-wise home improvements are all ways to achieve your goal, without sacrificing your coverage.