When you buy a new home, it can be overwhelming to think about things like property valuations and homeowners insurance. In fact, concerns about insurance are common when we sit down with first-time homebuyers.
We often have clients ask us what they can do to reduce their homeowners insurance cost. With that in mind, we’ve decided to put together some tips and guidelines to help you negotiate with your insurance carrier. Here are six ways to save on your homeowners insurance cost.
#1: Don’t Settle for the First Quote You Get
One mistake a lot of first-time homeowners make is getting one quote for homeowners insurance and stopping there. We recommend getting several quotes, so you can compare costs and coverage.
If you’re not sure where to find insurers, try:
- Asking friends and families for recommendations
- Calling the Department of Insurance to check on consumer complaint ratios
- Checking the financial ratings of companies that offer homeowner’s insurance in your area
Use three quotes as your minimum. Make sure when you compare them you are comparing apples to apples. Coverage limitations can sometimes reduce costs, and you’ll need to decide if that’s a risk you want to take.
#2: Raise Your Deductible
As the deductible on an insurance policy increases, the cost of the policy decreases. That’s insurance 101, and it can help you save money on your homeowners insurance.
The key here is to make sure you can afford the deductible. Don’t go so high that you’ll struggle to come up with the money if you need to file a claim. Be realistic, but raise the deductible as high as you can within your comfort limits.
#3: Know Your Home’s Safety Features
If the home you are buying has safety features that minimize the chances you’ll need to file a claim, you may be able to turn those into a reduced premium. Here are some examples:
- Water sensors detect leaks before they turn into full-blown floods
- Storm shutters and shatterproof windows reduce the likelihood of storm-related damage
- A reinforced roof may be better able to sustain high winds than an old roof
- Modernized heating, plumbing and electrical systems minimize the risk of problems
Ask the current homeowner what they’ve done to make their home disaster-proof. Then, share that information with insurers to see if it lowers your premium.
#4: Ask About Discounts
You might be accustomed to talking to insurers about discounts on your car insurance, but you can do it for your homeowners insurance, too. Sometimes, behavior can impact your premiums. Likewise, you may be eligible for discounts based on where your new home is located.
- Non-smokers sometimes get a discount since smoking increases the chance of a house fire.
- If you’re buying a home in a gated community, some insurers will discount the premium because the added security reduces the risk of theft.
- If your new neighborhood has a Homeowners’ Association, you may be eligible for a discount. Some HOAs negotiate with insurance carriers for discounts.
- Finally, if you’re over 55 years old, you may be eligible for a senior discount.
Asking your underwriter or insurance agent about discounts can help reduce your costs. Make sure to mention that you’re a non-smoker if that applies.
#5: Bundle Your Insurance
Many insurance companies offer discounts to loyal customers. These are sometimes referred to as bundling discounts. They require you to have more than one type of insurance through the same carrier.
For example, you may want to consider making one of the companies you get a quote from the company that provides your automobile insurance. Likewise, your life insurance company might provide you with a reduced cost.
Sometimes, the savings you get from bundling insurance can be substantial. It may be worth asking every carrier you talk to if they’ll reduce costs if you move their insurance to them. You might be surprised by how much you can save.
#6: Consider Home Improvements
What can you do if you’re not eligible for a reduction in your homeowners insurance based on disaster preparedness? One option is to make renovations to your new home and then go back to your insurance carrier for a discount after the fact.
Of course, renovations can be expensive. You’ll need to weigh the cost of the renovation against the potential savings over time. In Florida, any home near the coast will be expensive to insure without protection against storm damage. Adding storm shutters might be a worthwhile investment both in the short- and long-term.
Paying for homeowners insurance might not be ideal, but you’ll be glad you did if your home is damaged. The key is to compare costs, ask questions and choose the coverage that will give you the protection and peace of mind you need.
To learn more about Addition Financial’s flexible mortgage options for new homebuyers, please click here.
Posted on May 30, 2018
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