This One Trick Can Save You Hundreds of Dollars on Home Insurance

Home insurance is a critical tool for homeowners because it provides a form of financial protection against risk and loss. If you already have homeowners insurance, it still pays to shop around periodically. Comparison shopping lets you make sure you’re getting the best price and coverage, and can save you hundreds of dollars. Use the tips we’ve outlined below to help you .

How Often Should You Shop Around for Home Insurance?

The best time to review and change your homeowners insurance policy is generally when your current contract is up for renewal, which is usually on your renewal date. This allows you to make sure that your current coverage still meets your needs while giving you time to research other carriers to see what rates and coverage they have to offer.

It’s also a good idea to shop around when you’ve made certain improvements to your home, such as a home security system, smoke/carbon monoxide detectors, a new roof, new electrical and plumbing systems, or even new landscaping to protect you from natural disasters. All of these upgrades can help you score lower premiums.

Any (major) changes you make can increase the value of your home but some can also increase the liability. These include adding a pool or that trampoline your kids have been nagging about.

You can cancel your policy mid-term if you get a better rate elsewhere. Some companies offer refunds for unused premiums, but smaller companies often charge penalties for cancellations, so check with your existing insurer before you sign up with the new insurer. If you have a mortgage, you should have the new policy in place before you cancel the old one to avoid any complications.

Money-Saving Questions to Ask When Shopping

When you’re looking at other home insurance providers, there are a few questions you should have in mind. The obvious place to start is the cost. Find out whether the monthly premium can be reduced using promotions and discounts, such as alumni or senior discounts. For example, you may qualify for a discount of up to 10% if you’re at least 55. This means a 65-year-old in Louisiana with an average annual premium of $3,994 on a $350,000 home may save as much as $399.40 with a senior discount.

You may also be able to cut your insurance bill by bundling additional policies like auto and life insurance with your home policy. Buying all your insurance products from the same insurer can shave off as much as 5% to 15% off your monthly premiums.

Other questions you should consider asking any potential insurance company:

How to Shop Around for Home Insurance

Follow these steps to shop around for home insurance so you get the best price.

1. Decide How Much Coverage You Need

Determine how much coverage you’ll need for your dwelling and personal property. Make sure you have enough to cover rebuilding your home and your belongings. Some other considerations include covering costs for any living expenses while your home is being rebuilt.

Some of the factors that may impact your coverage include the type of construction, the style of your home, your roof and roofing materials, any exterior structures on the property, and any additions or improvements you’ve made.

2. Consider Add-Ons

Add-ons, endorsements, or riders are optional additions to your insurance policy. They modify your policy and expand (or restrict) your coverage by adding certain benefits. Some of the most common examples include:

• Flood insurance: Coverage for floods isn’t part of a standard homeowners insurance policy and must be purchased separately. This covers your home and belongings against damage from flooding, storm surges, downpours, and overflow from bodies of water.
• Water backup: This rider covers damage caused by water that backs up from drains and sewers or because of sump pump failures. Like floods, damage from sewer backups and sump pump failures is often excluded from traditional homeowners insurance policies.
• Identity theft: This isn’t standard with your home insurance policy. But adding this rider to your policy can protect you if your identity is stolen by covering any legal fees and credit monitoring costs.

3. Consider Specialized Insurance If You’re in a High-Risk Area

Insuring a home in a high-risk area can be tricky. These are areas with extreme weather or high crime rates. Structural concerns (like an outdated electrical system) or occupancy issues may also make your home difficult to insure.

If you fall into one of these categories, you’ll probably need to get specialized insurance. So, if your home is in a flood zone, you should get flood insurance. (Most government-backed mortgages require an active flood insurance policy.) These policies are available through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency (FEMA).

Getting home insurance can be challenging in a high-crime area, but it isn’t impossible. Adding a home security system can increase your chances of getting homeowners insurance.

4. Get Quotes From at Least 3 Companies

When you’re shopping around, get quotes from at least three different companies—or more if you can—and make sure each aligns with your needs. This gives you a good idea of what the monthly premiums, deductibles, and coverage limits are for each company.

There are several ways to compare quotes without having to go to multiple insurance company websites. States such as Florida and California have rate comparison tools, and commercial platforms such as The Zebra and Policygenius can also help you get quotes from multiple insurers. You could also contact an independent insurance agent who sells policies from several insurance companies. Trusted Choice can help you find an independent agent.

5. Read the Fine Print

This is important before you make your final decision. The fine print includes the full scope of your policy, including the coverage, exclusions, limitations, covered perils, liability coverage, damage coverage, and property coverage.

Going over the fine print is important so you don’t miss anything and don’t come across any surprises later, especially if you have to make a claim. Remember, while agents should go over the fine print with you, there may be no legal requirement for them to do so.

A Final Word of Caution

One other way that insurance companies assess your risk is by considering how many companies have insured you in the past. Frequent changes in the last three to five years may raise red flags for a new insurer and suggest that you’re a high risk, even if you haven’t filed a claim, because you’re focused on the cost of your policy.

The Bottom Line

Homeowners insurance protects you from financial losses if your home is damaged. Although it’s expensive, shopping around periodically can save you a lot of money, even if you already have coverage. Get quotes from multiple companies, ask about discounts and promotions, and don’t forget to read the fine print to avoid any surprises once you settle on a policy.