How to Get the Best Rate on Your Homeowners Insurance

If you own a home, then you have homeowners insurance.

You purchase homeowners insurance when you buy your home and forget about it.

Unfortunately, rates can go up over time and the price you pay for your homeowners insurance can increase by hundreds of dollars if your insurance professional isn’t actively monitoring your rates.

It’s important to remember the “cheapest” rate isn’t necessarily the best homeowners insurance rate.

The average homeowner pays nearly $1,100 a year (nationwide) for home insurance, according to the latest data from the Insurance Information Institute. That’s money well spent — your rate pales in comparison to what it would cost to rebuild your house and replace your belongings after a disaster.

But it’s good to know whether you might be able to trim costs.

Here are seven ways to save on homeowners insurance and get the protection you need at the best price possible.

1) Find a Good Agent

You’d never know this by watching insurance as on television, but the key to getting the best rate on your homeowners insurance finding the right insurance agency.

  • Do they take the time to understand your unique needs?
  • Do they ask questions to find discounts?
  • Are verifying the appropriateness of your current coverage?
  • Do they have access to multiple carriers?
  • Are they able to service all your insurance needs?

These are just a of few of the questions you should be asking about your insurance agent.

Working with an independent agent is always the best way to get the best on your homeowners insurance because they know the market better than anyone else.

At Rogue Risk, we would love to be your agent.

2) Find a Right Insurance Company

The best test of an insurance company is how well it handles claims. 

Companies’ damage estimates tend to be among the best predictors of customer satisfaction. Lower-rated insurance companies have a greater percentage of customers who disagreed with their damage estimates and felt their final claim settlement was too small.

According to Consumer Reports, people said they’d changed carriers in the previous three years. More than half of those who switched said they did so because they got a better price. However, in most cases, these insurance buyers were also giving up coverage, creating the potential for large uncovered losses on their homes.

Note, though, that top-rated companies work through independent insurance agents, and their homeowner’s insurance rates often are not included in comparison shopping sites.

The “Right” insurance company will provide the correct mix of coverage at a competitive price.

Cheapest is never the answer. There is always a catch with cheap.

The right insurance company will act as a partner and show up in the event you have a loss.

3) Get the Right Coverage

There are no state-mandated requirements for homeowners coverage (which is different from auto insurance in most states), and a mortgage lender may only require you to insure up to 80 percent of the replacement value of your home.

This doesn’t mean it’s ok to be underinsured.

The cost of underinsuring your home is felt in large uncovered losses you weren’t expecting.

However, the flip side is also true, buying too much coverage isn’t worthwhile, either.

It’s a mistake, for instance, to assume you need coverage equal to your home’s market value. That value includes the land your home sits on, which will remain even after a catastrophic loss.

Instead, insure your home to its replacement cost (what it would cost to rebuild your home).

Your insurance agent should have tools to help you figure out the right replacement cost for your home.

This ensures you get the best rate for the right coverage.

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4) Ask About Discounts

While a good insurance agent is going to work hard to find every discount they can, it’s extremely appropriate for you to ask about discounts as well.

Here is a list of common homeowners insurance discounts:

  • Bundling/multi-policy discount – Combining your home and auto insurance with the same insurance company, (this is called bundling), can provide a large discount depending on the carrier.

  • Loyalty discount – Contrary to popular belief, many insurance carrier reward loyalty.

  • Claims-free discount – Insurance companies may lower your rates if you go a certain amount of years without filing a home insurance claim. 
  • Monitored burglar and fire alarm systems – The faster the fire department and emergency services can respond, the less damage your home will suffer.
  • Water leak sensors – Many insurance companies now offer discounts when you install water leak sensors on pipes and in your basement.

There are many other discounts specific to each insurance company including, New Home, Mature Owner, Married, Paid-in-Full, Gated Community, and Home Improvements just to name a few.

5) Be Smart About Submitting Claims

Making multiple claims in a short period will probably trigger a rate increase or even cause your insurance company not to renew your policy.

The rolloff period for most insurance claims is three years and three months. 

Filing a single claim during this time period should have little to no impact on your insurance premiums. However, if claims begin to stack up, your rates will go up.

Avoid submitting claims of just a few hundred dollars above the deductible. Doing so might erase discounts you’re getting for remaining claim-free.

If you have an incident, call your independent agent to discuss the pros and cons of submitting the claim before you report it to your homeowners insurance company.

6) Shop Your Rates

This is part of your insurance agents job.

Independent insurance agents have access multiple carriers to shop your insurance. Going to back ton number one on this list, the key is hiring the right insurance agent.

If you’re working with the right insurance agent, then you are paying for a package of coverages (auto, home, endorsements, umbrella, etc) that serve your personal and family needs.

Shopping out to other agents and carriers only helps if you agent isn’t doing their job.

7) Raise Your Deductible

Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim.

Deductibles are different for every policy so you want to work with your insurance agent to make sure you have the right deductibles for each one of your insurance policies.

The higher your deductible, the more money you can save on your premiums. 

Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent. 

Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the east coast, you may have a separate windstorm deductible; if you live in a state vulnerable to hail storms, you may have a separate deductible for hail; and if you live in an earthquake-prone area, your earthquake policy has a deductible.

8) Don’t Confuse Market Value and Replacement Cost

Don’t confuse what you paid for your house with the cost to rebuild your house.

The land under your house isn’t at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. This is why you always want a replacement cost policy for your homeowners insurance.

You do not include the value of land in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.

9) Bundle Your Home and Auto Insurance

If there was a golden rule in homeowners insurance discounts, it would certainly be the significant discount you receive for bundling your home and auto insurance (and umbrella policy potentially).

Some companies will discount as heavy as 15 percent off your premiums if you buy two or more policies from them.

Make certain this combined price is lower than buying the different coverages from different companies.

10) Don’t Have Claims

These are many risk management type things you can do to reduce the potential for a claim.

A few examples include finding redundancies in water removal from your basement, trim trees back away from your house and modernizing heating, plumbing and electrical systems to reduce the risk of fire and water damage.

Another good step in prevention (or reducing claims) is to improve your monitoring services such as fire, burglary and water.

You can usually get discounts as well of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks.

Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations.

11) Maintain Good Credit

In many states, credit is a factor in your homeowners insurance premium.

Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowners insurance policies.

In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied.

To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible.

Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

12) Don’t Shop Your Insurance

If you’ve kept your coverage with your insurance company for several years, you may receive a special discount for being a long-term policyholder. 

Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.

Loyalty can also play a role in your claims experience (fyi).

But make certain to periodically compare this price with that of other policies.

The Rub

All homes have unique risks and exposures that will change the homeowner’s insurance rate in different ways. 

And while proper coverage is always why you buy insurance, you shouldn’t have to overpay for it.

Rogue would love to help you solve that problem.

If your current insurance professional has never addressed programs such as these with you before, then I’d encourage you to reach out to us today.

I look forward to introducing you to a new way of viewing your personal insurance program.

Thank you,

Ryan Hanley

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