Homeowners insurance provides protection for a residential building and all the assets therein, offering coverage for accidents that happen in the house or the property as a whole. If you own a home, insurance ensures that you are covered in the event of extensive losses or damages. Instead of starting over from zero, you get a check that reduces how much the accident affects your finances and quality of life.
That being said, you don’t want to pay too much for your homeowners insurance. The more you send to the insurance company, the less you have to spend on other essential needs. Finding the right balance between adequate coverage and paying the minimum possible premium is key. And in this article, we’ll provide some tips to help you reduce your monthly payments:
1. Improve your credit rating
Insurance providers carry out credit checks to determine how risky you will be to insure. Subsequently, your credit score, payment history, debt profile, and insurance claim history are considered when your premium is being calculated. If your financial records show that you are creditworthy, you’re well-placed to get better rates.
As a result, before applying for home insurance, look up ways to improve your credit rating. There’s no short-term fix for this, so if you’ve not been paying your credit card balance on time, it will count against you. If you still have some time, you can start by paying off your debts on schedule and reducing your credit utilization. You may also request that prior negative entries are removed from your report.
2. Increase your deductible
The higher your deductible the lower your insurance premium; the lower your deductible, the higher your premium. Just by increasing how much you’re responsible for if anything happens to your house, you can reduce your monthly payments by up to 10%. But you have to be careful not to be penny wise and pound foolish. You must find the right balance between your out-of-pocket costs and how much you pay the insurance company per month.
Depending on your situation, you may be in a good position to request a higher deductible. For example, if you live in a safe neighborhood where the risk of losses or damages to your home are minimal, you can increase your exposure. By doing this, you’re betting that insurance claims may never be filed, but should you ever need coverage, you’ll get it.
3. Purchase only the coverage you need
Indeed, about 64% of homes in the US are underinsured, but you’ll be surprised to learn that quite a handful of people have too much insurance as well. To avoid paying over-the-odds and getting cover for risks you’re not vulnerable to, you may need to talk to a trusted insurance professional.
One of the biggest ways to reduce your premium is to trim the fat and only get as much coverage as you need. As a matter of fact, every couple of years, you should sit down with your agent and review your homeowner insurance. This helps you confirm that your insurance policy meets your actual needs without going overboard.
4. Avoid constant filing of claims
Another way to reduce your homeowners insurance is to avoid filing claims on all small losses and rather, prioritize compensation for bigger losses. Filing an insurance claim for every minor damage can lead to higher premiums or worse, a cancellation of your insurance policy.
If the cost of repairing a damage is not significant, or falls below your deductible limit, then you should fix it out-of-pocket. Letting go of those small amounts can help you get better rates in the future. Additionally, some insurance providers offer claim-free insurance discounts – you won’t qualify for those if you have a long history of reporting the tiniest of damages.
5. Leverage smart home devices
Installing devices like leak sensors, smart deadbolt, security cameras, water sensors and smoke detectors can reduce your premium. Insurance providers like these gadgets because they help homeowners detect issues early and avoid, instead of reacting after the damage has been done. As a result, they give discounts to houses that use them.
However, their prices can add up quickly, so before you invest in these tools, do the math and make sure it’s worth it. One thing to keep in mind, though: smart home devices do more than reduce your insurance premium, they also keep you and your loved ones safe.
In truth, many of the things required to reduce your homeowners insurance are good for your financial health. And while our focus in this article has been to cut down your premium, you will benefit greatly from an improved credit rating, smart home devices, and more restraint when it comes to filing claims.
If you’d like to connect with a professional or have any questions about getting optimal homeowners insurance, schedule an appointment with our dedicated insurance specialist. In addition to more personalized tips, you get the unique opportunity of reviewing your current plan and confirming you’re not paying too much for the coverage you have.
