Find the Cheapest Homeowners Insurance Quotes in Your Area
There are three ways you can save money on your home insurance policy: by comparing quotes to find the best, least-expensive insurance company in your area, by selecting only the coverage types and deductibles you need, or by qualifying for one of the many discounts insurance companies offer to policyholders. By following these steps, you could save as much as 20%–40% on your homeowners insurance premiums. Below we go into more detail about the discounts you may qualify for.
How to Qualify for Home Insurance Discounts
Some homeowners insurance discounts are applied when you first buy your policy. For example, if your house is relatively new, it may be less in need of certain repairs—such as a new roof—compared to older homes. Insurance companies will consider that reduced risk when they determine your rates, so you may already be receiving some policy discounts.
Other discounts may be applied when you upgrade your home or reach certain milestones, such as paying off your mortgage. However, it's important to understand your home insurance company's limits on protection discounts. Homeowners insurance companies calculate their premiums and discounts differently, and some insurers limit the ultimate amount of discounts any policyholder can receive. For example, AIG limits their "protection credit" to 15% of the total policy premium. If you've already reached that limit, you may be unable to receive additional discounts.
Here are some common ways you may be able to qualify for a discount on your homeowners insurance policy, either at the beginning of your policy or after you install an upgrade.
Bundle Your Home and Auto Insurance Policies
Most insurance companies offer a discount to policyholders who bundle their home and auto insurance policies. For example, if you carry an auto insurance policy from State Farm, and you add a homeowners insurance policy, State Farm will offer you a discount of up to $825 off of your annual home insurance premium.
While most people bundle home and auto insurance policies, you can also bundle other types of insurance policies. For example, AIG offers discounts to policyholders who bundle floater policies for private property, such as pieces of art, with their home insurance policies. Homeowners who bundle AIG policies are eligible for a discount of up to 12%, if their annual property-specific premium exceeds $12,000.
Here are examples of the size of potential discounts that insurance companies offer to homeowners who bundled their home and auto insurance policies. Your discounts may vary based on your home, car, claims history and state.
|Insurance Company||Discount to Homeowners Premium for Bundling Home + Auto|
|Amica||up to 15%|
|Nationwide||up to 20%|
|State Farm||up to 22%|
|USAA||up to 9%|
|Progressive||up to 10%|
|Farmers||up to 10%|
|Travelers||up to 13%|
Ask for a Loyalty Discount
Home insurance companies regularly reward long-term customers with loyalty discounts. As a policyholder is in good standing and remains claim free, most insurers will reduce the cost of their premiums each year. The longer you remain claim free, the greater your discount, to a point. For example, State Farm offers a discount of up to 24% to customers who remain claim free and have been with the company for at least nine years, provided that customer was also claim free during the five years prior to becoming a policyholder.
If you notice that your homeowners insurance premiums have gradually increased, that does not mean you aren't receiving the discount. Your policy's rates may increase over time due to the age of your home and the increasing likelihood of a claim. However, your loyalty discount may still be factored into those rates. If you're not sure whether the discount is being applied, ask your insurance agent.
Ask if you Qualify for an Impact-Resistant Roof Discount
Hail and other falling objects can cause a significant amount of damage to your roof, which would be costly for your insurance company to repair. Because of this, insurance companies often offer discounts to policyholders whose houses are built with hail-resistant roofs.
However, not all impact-resistant materials receive the same discount. Materials must be tested and assigned a rating ranging from class 1 through class 4, the latter receiving the highest discount. If your house has impact-resistant roof shingles, or if the roof is composed of metal, ask your insurance agent if you qualify for a discount.
Currently, homeowners in 27 states could qualify for impact-resistant roof discounts. For example, if you own a house with a class 4 impact-resistant roof in certain parts of Texas, you could receive a discount of up to 35% off your homeowners insurance policy.
Improve Your Credit Score
In most states, homeowners insurance companies are allowed to consider your credit score when determining your policy's rates. Among other criteria, your credit score is affected by the amount and type of debt you carry and the timeliness of your payments. Revolving debt, such as the debt you carry on a credit card, and high credit utilization, using the majority of credit available to you, adversely affects your score. Mortgage debt, on the other hand, does not significantly diminish your score—as long as you submit your payments on time. It's difficult to improve your credit score in the short-term. However, if you pay off your revolving debt and pay other loans on time, you can improve your credit score, and it’s possible you'll receive better home insurance rates.
Install Smart Smoke Alarms
Most people forget to check their smoke alarms on a regular basis. That's why smart smoke alarm systems, such as the Nest Protect, connect with your insurance company via wifi to inform them that the system is working. Because of this, insurance companies may offer you a discount of up to 5% off your annual premiums if you install a smart smoke alarm system. Assuming you have a $1,000 annual policy, your smart smoke alarm could pay for itself in as little as three years, in addition to adding enhanced protection for your home. You may receive a discount if you add fire extinguishers to your home, as well.
Tell Your Insurance Company if You Install a Fire Sprinkler System
Installing a fire sprinkler system will cost more than the home insurance discounts you'd receive—at least for the first six decades after the installation. According to the National Fire Protection Association, fire sprinkler system installation costs an average of $1.35 per square foot covered, or $6,026 per system installed. If you're retrofitting an already-built home with a sprinkler system, your costs may be higher. However, sprinkler systems can prevent the loss of life and property, so you may choose to have one installed anyway. Alternatively, you may have just purchased a home with a system already installed. If you have a fire sprinkler system in your home, inform your your insurance agent of the system and ask for a discount. You may see savings of up to 10% on your annual policy.
A common concern for those unfamiliar with residential fire sprinkler systems is the fear that once the system is initiated, all of the sprinklers in the house will activate and drench the home and all of the personal property inside. This is not the case. Sprinkler systems activate individually when they detect temperatures between 135 and 165 degrees Fahrenheit.
The amount of weight various homeowners insurance companies give to smoking-related risk varies. However, if you or someone in your house smokes, your insurance company may consider your home at a higher risk of fire. Not only could dropped or unattended cigarettes pose a risk, but also, children are likely to have increased access to matches or lighters if someone in the home is a smoker. And according to the National Fire Protection Association (NFPA), fire departments responded to approximately 90,000 smoking-related fires in the U.S. in 2011. These fires caused an estimated 540 civilian deaths, 1,640 injuries and $621 million in property damage. If you smoke, your home insurance premiums could be 1% to 15% higher than those of nonsmokers.
Additionally, quitting smoking can reduce your health and life insurance premiums, and your your weekly spending amounts as well.
Tell Your Insurance Company if You Install a Central Alarm System
The monthly service fees of a central alarm system—the kind that alert security or emergency agencies during a fire or burglary—are higher than any discount you'd receive from your insurance company. However, you might choose to install an alarm system anyway, to improve the security of your home. If you do, ask your insurance company for a discount. You may receive as much as 10% off of your annual home insurance premium.
Homes with deadbolt locks or local burglar alarm systems—the kind that alert only those in the immediate area—may or may not qualify for a home insurance discount. It's always smart to ask your agent. Sometimes they can use their discretion to offer discounts.
Tell Your Insurance Company if You Install a Lightning Protection System
A bolt of lightning can deliver as much as 30 million volts of electricity, which could easily set fire to a home, or destroy the electronics and appliances inside. There were 109,049 paid lightning claims in the U.S. in 2016 that cost an average of $7,571.90 per claim, according to the Insurance Information Institute. Homes with lightning protection systems do get a discount on insurance policies, but it could take almost the rest of your life for the savings to make up for the cost of the installation.
For example, AIG offers a 3% discount if you have a lightning protection system. But installation of the system costs an average of $1,200, although your cost may be higher or lower depending on the material and number of rods you need to install. Say your home insurance premium is $1,000 per year and you qualify for a 3% discount after installing a $1,200 lightning protection system. That means you would save $30 per year, and it would take over 40 years for the savings to reach the original cost of installment. However, if you have purchased a home that already has a lightning protection system installed, you should contact your insurance agent and ask for a discount.
Tell Your Insurance Company if You are Retired
Most burglaries and significant hazards, such as fires, take place when nobody is at home to spot the danger. As such, working-age families pose more risk to insurance companies than retired homeowners, since retired individuals are at home more often. If you have recently retired, tell your home insurance agent and you'll likely receive a discount.
How to Choose the Right Coverage and Deductibles
One of the easiest ways you can lower your monthly homeowners insurance premiums is by choosing a higher deductible. Your deductible is the amount of money you're required to pay for a repair before your insurance policy kicks in. If your home is in good condition and unlikely to face risks in the coming year, this strategy might be right for you. However, if your home is older, or located in an area prone to certain risks, a high deductible may end up costing you more, in the event you have to file a claim. If you do elect a high deductible, make sure it isn't high enough to cause financial hardship if you do need to file a claim. Regardless of the size of your deductible, you should account for that potential cost when determining how much money you need in your savings account.
What Coverage Limit Should I Choose?
Your homeowners insurance policy will be subject to one of three policy limits, derived from the total value of your home.
- Actual Cash Value (ACV): The ACV of your house is its market value, minus depreciation. For example, if your roof cost $20,000 to install 20 years ago, and it is totally destroyed by a hurricane, your insurance policy would not pay you the full $20,000 to replace it. Twenty years of wear and tear have diminished the value of your roof, so the amount you'd be reimbursed could be substantially lower than the amount it would cost to replace your roof today, since you’d receive just the actual cash value of your current roof. You'd then be responsible for the difference in price. However, choosing a homeowners policy with an ACV limit is your cheapest option, if you're looking to lower your monthly home insurance premiums.
- Replacement Cost Value (RCV): Your house's RCV is the amount it would cost to replace your home today. While more expensive than a policy with an ACV limit, insuring your home's RCV could prevent you from having to pay a significant amount of money if your home is totally destroyed by a covered peril, such as a fire.
- Guaranteed Replacement Cost (GRC)/Extended Replacement Cost (ERC): The GRC/ERC is the most expensive limit you can choose for your homeowners insurance policy. However, it guarantees that your insurance company will pay a specified percentage above your home's RCV if a localized hazard, such as a hurricane, temporarily drives up the cost of labor and materials in your region.
If your current policy is subject to a GRC/ERC limit, and you're interested in lowering your home insurance premiums, you might want to consider lowering your policy limit to your home's RCV. However, homeowners who live in an area prone to regional disasters may want to pay for the extra coverage.
We recommend all homeowners maintain at least RCV coverage, if they can afford it.
How to Know When You Should File a Claim
When you file a claim with your home insurance company, you will likely see an increase in your homeowners insurance policy premiums when you renew your policy. This is especially true of claims for damage for which you are to blame, such as a fire you accidentally start with a cigarette. Those who file multiple claims within the span of a few years will see an even higher increase in their premiums. Because of the financial implications of filing a claim, some repairs may be cheaper to pay for with your own money.
For example, if you file a home insurance claim for $1,250, but your policy is subject to a $1,000 deductible, you'll only be reimbursed $250 from your insurance company. However, when you renew your policy, you may discover that your rates are 10% higher than they were the year before. In this situation, your increased premiums would end up costing you more over the long term than the reimbursement you received.
Homeowners insurance policies are meant to act as a safety net for destructive incidents, not to cover the routine maintenance required by your home as it ages. Always consider deductibles and increased premiums when deciding whether filing a claim makes sense.
How to Find the Best Cheap Homeowners Insurance
Finally, one of the most effective ways to save on your premium is by shopping around and comparing quotes from the best insurance companies in your area. Insurance is a competitive industry, and insurers often offer discounts to policyholders looking for a new insurance company. You can easily receive insurance quotes online by providing insurers with some basic information about you and your home. We recommend you gather quotes from at least three separate insurance companies in order to find the best rates and the coverage that is right for you.