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15 Ways to Reduce Your Home Insurance Costs

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There's a long list of discounts if you know the right questions to ask and which home improvements to invest in.

By Mia Taylor, Better Homes & Gardens | April 1, 2021

Shopping for insurance (of any type) is one of life’s least pleasurable chores—ranking somewhere between negotiating a car purchase and tracking down a year's worth of receipts in order to file your annual tax returns. Still, as much as we all hate buying insurance, rushing through the process can be a mistake.

For those who’ve done their homework and know which questions to ask (or home improvements to embark upon), there’s a long list of home insurance discounts. From bundling rebates to safety discounts, here are some of the best ways to save money on your home insurance bill.


1. Invest in a home security system.

The statistics are pretty clear: not having a home security system increases the likelihood that your house will be robbed by 300%. What’s more, 83% of burglars say they look to see if a home has an alarm when deciding whether to break in. These are just some of the reasons why a home security system scores you an insurance discount, says Alan Umaly, president of Westwood Insurance Agency in Los Angeles.

“When you have a security system installed in your home, you’re not only protecting your belongings from being stolen, you are also protecting your home from any damage that burglars might cause during a break-in,” says Umaly. “Many home security systems now come with additional safety features such as surveillance cameras and automatic fire or carbon monoxide alerts. The more features your home security system has the higher your home insurance discount may be.”

2. Install a fire safety system.

Water safety systems, also known as fire sprinklers, are another route to earning yourself an insurance discount, says Umaly. “These systems respond to fires inside the home and quickly release water or other flame retardants to contain the damage caused by heat, smoke, and flames,” says Umaly. “Having a water safety system can save your home from total ruin, especially if your local fire station is slow to respond or is located far away. Oftentimes, home insurance providers will issue discounts to homeowners who install these safety systems.”

3. Pay small claims out of pocket.

Even filing just one claim can cause your homeowners’ insurance carrier to apply a surcharge on your premiums for up to five years, says Madelyn Mauk, private risk advisor with Holmes Murphy. With this in mind, you may want to think twice before picking up the phone to report a claim, carefully weighing whether it might be more cost-effective to simply pay for whatever the problem is on your own.

Mauk suggests that if you’re considering filing a claim and the cost is close to what your deductible would be, then you’re better off paying for repair out of pocket. “Using homeowners’ insurance only for catastrophic claims can lead to a reduction in insurance cost,” says Mauk. “Also, if you view homeowners’ insurance as only being for catastrophic claims then you can carry a bigger deductible, which will also decrease the cost of your insurance.”

4. Install a water shut-off device.

Yet another proactive measure you can take to reduce insurance premiums is installing a water shut-off device, says Mauk. “Water is one of the leading claims seen by homeowners’ insurance carriers. These claims tend to also have a larger severity in the claim cost,” she explains. “A water shut-off device is installed on the main water pipe that comes into your home. If the device senses water flowing for an extended period of time or an excess of water, then it will shut the water off to the home. This means if a pipe bursts while the homeowner is not home, the water will not continually run and cause further damage.”

5. Lock-up with deadbolts.

Installing deadbolts on your home’s point of entry is a great way to slow down even the most expert would-be burglars, says Umaly, of Westwood Insurance Agency. “This is why many home insurers offer discounts to homeowners who install deadbolts,” says Umaly. “However, the type of deadbolt you choose matters.”

When selecting a deadbolt, look for options labeled Grade 1 or Grade 2, Umaly notes. Avoid Grade 3 deadbolts, as they tend to be the weakest.

6. Replace your roof, HVAC, electrical wiring, or plumbing.

Conduct an assessment of your home and figure out which items need updating or renovating and focus on undertaking projects that may also cut your insurance premiums. “Insurance carriers will give you more favorable rates based on how recently your roof, HVAC, wiring, and plumbing has been replaced,” says Mauk. “Insurance carriers believe that when these items are newer, they will see less claims.”

7. Increase your deductible.

One of the most common deductible amounts chosen by homeowners is $1,000, says Mauk. Yet, if you’re willing to increase the deductible slightly, it’s possible to realize quite a bit of saving on your premium. “Depending on the insurance company, a client could save 10 to 20% by increasing the deductible to $2,500,” says Mauk. “Our rule of thumb is that if you save the difference in three years, then it is worth considering. For example, if you have a $1,000 deductible and bumping the deductible to $2,500 would save you $500 per year, then it would make sense to make the jump.”

8. Bundle coverage.

Probably one of the most widely known and simplest tips for cutting insurance costs, bundling means using the same insurance carrier for multiple policies, such as your auto, home, and life insurance. “Bundling provides the opportunity to take advantage of package pricing, which offers discounts of as high as 20%,” says Brian Flood, vice president in the personal insurance division of HUB International.

Cost savings isn’t the only reason to bundle, says Flood. This approach also streamlines your monthly bills, as you’ll be receiving a bill from just one company for your policies. And yet another benefit of this approach, one that's probably less obvious: there's a reduced likelihood of an insurance company canceling coverage due to you filing a claim. “The company has a greater interest in not losing the accompanying policies,” says Flood.

9. Review your policy annually and shop around.

Many consumers include home insurance premiums in their mortgage escrow accounts. When you take this approach, insurance renewal bills go directly to the mortgage bank, causing many consumers not to track annual policy costs, says Flood. Taking a ‘set it and forget approach’ however, is not ideal if you want to snag the most competitive prices.

“If your policy is billed to your mortgage bank, check each year to see how the policy cost is trending and if it might be time to pursue a better option,” says Flood. “Much like a consumer likes to see a doctor for a second opinion, reviewing your home insurance with another insurance agent often further educates consumers about the home insurance policy and may help reduce the cost of the policy.

10. Keep your credit score as high as possible to reduce rates. 

Is your credit score in bad shape or something less than stellar? Consider working on that in order to obtain cheaper insurance premiums in the future. Many consumers don’t realize that their credit score is taken into consideration by insurance companies when assigning premiums.

“The insurance companies know that credit score is evidence of reliability and risk. They set the lowest rates for those homeowners who have the highest scores,” says Allyson Dennen, an accredited financial counselor for Fab Life Now.

11. Tell your insurance company if you’re part of a homeowners’ association.

Insurance companies tend to look at homeowners associations (HOAs) favorably, as HOA properties are generally well maintained and face lower risks of theft and vandalism, says Pat Howard, home insurance expert at Policygenius. “You may be able to save money on home insurance if you belong to a homeowners association,” says Howard. “If you’re part of one, it’s worth letting your insurance company know.”

12. Inquire about a claims-free discount.

According to a Policygenius survey, 53.4% of homeowners didn’t know that going several years without filing a claim could also earn them a discount. “This is usually called a claims-free discount, and it’s worth asking about if it’s been years since you last filed a claim,” says Howard.

13. Investigate lesser-known discounts.

Some insurance companies and agencies may offer home insurance discounts that aren't widely discussed or known about. These might include discounts for paperless billing, working in a specific career such as teaching, or firefighting, or providing a discount if you pay your premium automatically through your bank. “Unless you check directly with your provider, you might not know what other savings you could be eligible for,” says David Adler, president and owner of Denver-based Adler Insurance Group.

14. Remove high-risk items from your property.

Believe it or not, insurers may raise your premiums because they deem something on your property to be an "attractive nuisance," says Adler. “Things like trampolines, tree-houses, and hot tubs can carry a significant amount of risk, as those items can have a high risk of injury,” Adler explains. “Getting rid of those items could result in some serious savings on your home insurance policy.”

15. Install a smart thermostat.

Smart home technology has so many perks. It’s fun, it makes your life easier and it can reduce your monthly insurance bills.“The addition of a smart thermostat such as a Nest can also bring homeowners insurance costs down,” says Jim Hyatt, senior vice president of personal lines at Arbella Insurance Group. “Today, eco-friendly and energy-saving home home improvement tactics are being rewarded by most insurance companies in the form of a discount or credit to the homeowners premium.”

Ask Questions and Negotiate 

When shopping around for home insurance, there’s nothing wrong with asking as many questions as you need. If it's not already obvious, doing so could save you money. Furthermore, don't forget to negotiate.

“If some policy features are simply not applicable to your situation, see if the policy can be amended to remove these items,” says Flood, of Hub International. “The consumer does have many ways to negotiate to be sure they’re purchasing the best overall value for their dollar.”