10 ways to lower your home insurance premiums

Home is often the most valuable asset we have in our life. Do you want to protect it from natural disasters, break-ins, or damages? Consider purchasing home insurance. It can give you the sense of security because it will cover various risks to the house itself as well as injuries to third parties visiting you in the house. Our tips will help you reduce home insurance premiums and get discounts. 

There are basically two main reasons why people purchase home insurance. First, everybody wants to protect their property from any damages or destruction. Second, if you qualify for a mortgage, the lender will oblige you to insure the collateral. So, if you are going to or already own a house, an insurance policy is often the necessary investment to avoid financial losses in future. 

Home insurance basics 

Home insurance, sometimes called property insurance, provides three main types of coverage: 

•    The cost of rebuilding or repairing your home and the structures around it (for instance, a garage)
•    The cost of replacing or reimbursing the contents of your property. 
•    Liability coverage which pays for accidents that occur on your property for which you are held responsible, for example, if broke the window of neighbour house while playing baseball. 

Home insurance contract is signed for a set period of time. The insured has to make payments, called premiums, to the insurance company every term. The conditions of standard home insurance have been defined by the Insurance Services Office (ISO), so standard coverage won’t generally vary from company to company. However, the rates will. 

Of course, everybody wants to save money on home insurance premiums and receive more benefits for less money. There is nothing wrong with this politics. However, when you are shopping for a home insurance policy, there is much more to consider than just how much you will need to pay. 

First of all, you need to choose the right type of home insurance policy, including special coverage for high-value items (artwork, jewelry, computer equipment, coin or stamp collections, radio and television satellite dishes and antennas). 

You might also need to purchase coverage for natural disasters such as earthquakes or flooding in addition to the basic policy. The average premium is around $500 per year in high risk areas. In the event of a natural disaster, the cost of repair or rebuilding your home would be certainly higher.

Another point is to determine how much coverage you need. Actually, it depends on the amount of money you would need to replace your house and land attached if total loss happened. Whether your house is new or old, insuring it up to 70% is not enough if you can’t afford paying the remaining 30% out of your pocket. 

Application process 

If you want to submit an application for home insurance, you need to provide a plenty of information. First of all, the insurance company will ask you about your date of birth, Social Security number, current job and employment history, marital status and previous addresses. 
The insurers will also check your credit score to see whether or not you are a responsible customer. People with financial problems tend to pose a greater risk. Another important point is your "loss history." The insurance company will want to know what kinds of home insurance claims you have made in the past. 

After that you will need to determine what type of home insurance you want, the amount of your deductibles, and how you are going to pay for the coverage (in full or in installments). 

The necessary part of any application process is the appraisal of your home. Your insurance company will determine how much it would cost to replace your house and its contents. There are many various factors that they take into consideration: the age of your home, the materials used to build it, location, the number of rooms, the type of heating, overall condition of your house, etc.  

The insurers can also ask how many people live in your home, where they smoke, and how close your home is to the nearest fire station. The answers to these questions will help them determine your insurance premiums.

The appraisal is very important because it lets the insurers estimate the necessary amount they need to spend for rebuilding of your house in the event of a total loss. Keep in mind that it will depend on local construction costs, not on the market value of your home.

Reduce your insurance costs

When it comes to home insurance, it makes sense to be well prepared rather than under-insured. However, in tough economic times everybody wants to find the cheapest quotes. If you think that your insurance premiums are too high, you can try to lower the cost of your homeowners’ policy. Keep in mind these points while you are shopping online: 

1. Deductibles. Raising your deductible can lead to significant money savings. A deductible is the amount you pay before the insurance company starts to pay your claim. You can choose a higher deductible in order to lower your insurance premiums (of course, if you don’t mind taking on the added risk). 

2. Multipolicy. Having home, car or other policies with the same company will let you receive a package discount. Usually, the insurance agency will reward you with a discount on all policies - sometimes 10% or more. 

3. Home security systems. Most home insurance companies will give you a discount for having a functional home security system in your home. It will protect your home from burglary and therefore make your house less of an insurance risk.

4. Smoke detectors. Preventing a fire loss is very important to you as well as to your insurance company. If you have smoke detectors in your home, don’t forget to mention this fact to your insurer. You may be able to qualify for an additional discount for even one smoke detector permanently fixed in your home. 

5. Deadbolt locks. Many insurance companies provide discounts for deadbolt locks because they make your home safer and more secure. Deadbolt locks are rather inexpensive in comparison with the possible insurance savings. However, it is often required to have deadbolt locks on all doors. 

6. Non-Smoking household. The fire risk greatly increases if you or your family members smoke cigarettes. That’s why insurance agencies provide additional discounts for non-smoking households - they pose the minimal risk. 

7. Affiliated organizations. Many insurances offer a discount if you are affiliated with certain organizations – for example, a credit union or college. Call your provider to find out whether they cooperate with any affiliated organizations. 

8. Previous claims. If you haven’t filed a home insurance claim in the past few years, it means that you are a low risk to home insurance companies. That’s why you can get a reduced rate.  

9. Credit score. A lot of insurance companies perform credit check to find out your financial responsibility and creditworthiness.  

10. Shop around. Get quotes from multiple insurance companies to make a careful comparison and find the best rates. Luckily for you, nowadays you can find all necessary information on the Internet.