Each year, that homeowner’s insurance bill that suddenly appears in your mailbox. It’s a big chunk of cash to pay out and can be a frightening moment.
The Federal Reserve Bureau says the average cost of an annual premium for homeowners insurance is between $300 and $1,000. For most homeowners, the annual costs for such a policy can be estimated by dividing the value of the home by 1,000, then multiplying the result by $3.50.
But you don’t have to pay those skyrocketing prices. Here are nine ways to keep the costs down or reduce them.
Consumers Reports says to check whether your state insurance department publishes online rate comparison. You can also find an agent who sells insurance from multiple carriers at the website – Independent Insurance Agents & Brokers of America – or find an insurer in your state by contacting your state’s insurance division.
Do you live in a gated community? You could get a discount from certain companies. Some other items that can get yield a discount include new plumbing and electrical wiring, hail- and fire-resistant roofing, earthquake or weather resistant retrofits such as storm shutters, bundling home and auto for a 10-15 percent price drop, or just not having a home insurance claim for 10 years, according to Realtor.com.
Raise your deductible
If you can afford to raise your deductible to $1,000 from $500, you could save as much as 25 percent, according to the Insurance Information Institute (iii). The higher your deductible, the more you save on premiums. If you live in a disaster-prone area, your homeowner’s policy could have a separate deductible for certain kinds of weather such as wind, hail, etc.
Install or improve a security system
The iii says you can cut at least 5 percent for installing smoke detectors, a burglar alarm or dead-bolt locks. But some insurance companies cut your premium as much as 15 to 20 percent by installing a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring station. Before doing anything though, check with your insurer about what they recommend and what they will give a discount for, plus how much your premium savings will be.
Improve and keep a good credit record
Not only do mortgage companies and car dealers check your credit record, but an increasing amount of insurers also do it to figure out what to charge homeowners for insurance policies, says the iii. In most states, your insurer must legally advise you of any adverse action, such as a higher rate, at which time you should check whether the information is right or wrong.
Buy a home close to a firehouse or fire hydrant
You actually may pay less for a house close to a fire hydrant or fire station or in a town that has a professional rather than a volunteer fire department, explains the iii. Choosing wisely can save you 5 to 15 percent. Check with CLUE (Comprehensive Loss Underwriting Exchange) and their report on the home you are considering buying. These reports contain insurance claim history and can help you judge some of the problems the house may have or had.
Pick the right dog
Sounds weird, but the National Commission of Insurers says that the types of dog breeds you have in or outside your home matters on how much the insurance company will add to your premium.
Use your age
Getting older isn’t easy, but being 55 years or older plus being retired can get you cheaper insurance.
Check your possessions and their value
Maybe you have a priceless ruby ring from your aunt. You bought a floater — extra insurance for the items’ full value which is not covered by your regular homeowner’s policy. You originally listed its worth at $10,000, along with various other jewelry. You can reduce or cancel your floater if you no longer have some of that jewelry or your appraisal of the ring came back much lower.
A homeowner’s policy does not insure things such as your furnace going on the fritz or a rotted deck. That’s maintenance. But the premium you pay each year for your home through your insurer will give you peace of mind in case of fire, tornado, a break-in or other such bad happenings.