You never want to skimp on homeowners insurance, but there are ways to save money on those premiums without putting you or your home at risk. Here’s a handy guide to getting excellent coverage at a reasonable price.
Your credit score. In most states insurance companies use customer credit scores as one factor in determining their level of risk and how much the company should charge for rates. This is also used in auto insurance. The lower the credit score, the higher the risk. So pay all your bills on time and keep your debts to a minimum. It just might save you some money on insurance.
Location, location. Before you purchase a home, think about its location and the surrounding area. Homes near the beach or a river prone to flooding will cost more to insure. Homes in high-crime areas will also cost more. Conversely, if your home is done the street from the fire department, let your insurance agent know because you might see your rates drop.
Property risks. A home with wood shingles is a higher risk for fire than one with metal or composition shingles. An older home can have old, worn electrical wiring and other infrastructure problems that can push up rates. Smoke detectors or a security system will likely earn you a discount.
Casualty risks. The best example of a casualty risk is a swimming pool. The possibility of someone drowning raises your rates. The insurance company may require you to have a fence around a pool to mitigate the risk. Other injury risks: trampolines and dogs that bite.
Claim history. If you have had claims against your homeowner policy, you face higher rates. It’s very similar to having an accident history with auto insurance and seeing your rates rise.
Figuring your deductible. Another way to lower your rates is by taking a higher deductible. You can lower your premiums by raising your deductible amounts. Be sure to have the higher deductible amount saved in your reserves in case of emergency. Use your monthly premium savings to further beef up your reserve or, if sufficient, save for something else.
Comparison shop. Just like you shop around for the best price on any major purchase, be sure to get several estimates on homeowners insurance. Rates vary widely. As an added bonus, most insurance companies will give you better rates if you bundle auto insurance with your homeowner policy. Sometimes the discount can be as much as 30 percent, according to Consumer Reports.