Here’s how to lower your homeowner's insurance costs


Because of rising premiums, more homeowners are unprotected

Inflation has driven up the cost of homeowners insurance over the last two years and some Americans have decided to roll the dice and leave their homes uninsured.

A recent report from the Insurance Information Institute found 12% of American homeowners are uncovered, betting that a fire or natural disaster won’t strike. Gregg Barrett, CEO of Waterstreet Company, which advises the insurance industry, says it’s a risky bet.

“While it might be tempting to save money in the short term, going without coverage poses significant risks,” Barnett told ConsumerAffairs. “If a disaster were to occur, the homeowner would bear the full cost of repair or replacement, which could lead to severe financial strain or even bankruptcy.”

Tarek El Ali, founder, Smart Insurance Agents, agrees. He notes that homes that have a mortgage are generally required to carry insurance but people who own their homes outright and who opt out of insurance coverage could lose everything.

“Homeowners insurance provides essential protection against a range of potential disasters, including fire, theft, vandalism, and natural disasters,” Ali told us. “By not having insurance coverage, homeowners expose themselves to the full financial burden of repairing or rebuilding their homes in the event of an unforeseen disaster.”

Some coverage is better than none

Both Barnett and Ali say there are ways consumers can reduce the cost of insurance while still maintaining some coverage. Barnett says homeowners can raise their policy deductible.

In the event of major damage, their costs would be limited to the amount of their deductible.While that raises your financial risk it lowers the risk for the insurance company, which may give you a lower premium.

Ali says homeowners can sometimes lower their premiums by simply shopping around to find the best quote. He also says bundling policies can also help since many insurance providers offer discounts if you purchase multiple policies, like auto and homeowners, from them.

Other tips

Other tips for lowering insurance premiums include:

  • Improve home security: Installing security systems, smoke detectors, and burglar alarms can reduce the risk of theft or damage, leading to lower premiums.

  • Maintain good credit: Some insurers consider credit scores when determining premiums. Maintaining good credit can help you secure better rates.

  • Update home features: Upgrading your home's plumbing, electrical systems, and roofing can make your home less prone to accidents or damage, potentially lowering your insurance costs.

  • Avoid filing small claims: If possible, consider paying for minor repairs out of pocket rather than filing small insurance claims. Frequent claims can lead to higher premiums.

  • Review policy annually: Regularly reassess your coverage needs. As your home's value changes or as you pay off your mortgage, you might be able to adjust your coverage for potential savings.

“Dropping homeowners insurance can be a high-stakes gamble, and it’s essential to consider all implications before making a decision,” Barnett said. “Homeowners should work closely with their insurance agents to explore ways to make their policies more affordable while maintaining essential coverage.”

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