How to Save Money on a Homeowners Insurance Bill

Lower Premiums by Adding Surveillance Cameras, Raising Deductible

Nov 18, 2009
Kelly Smith

Seabrook, Texas Home Destroyed by Hurricane Ike - Kelly Smith

Homeowners, auto, medical health care insurance; the big 3. The health care bill is pending; driving habits set car insurance; it's possible to lower homeowners premiums.

Reviewing and updating the homeowners insurance policy should be done periodically. Recall that the money amount that should be covered is the replacement price, not what the county or municipal property tax assessment authorities estimate as a way to get into the family pocketbook. It's also not the price that was paid for the home.

When to Update the Homeowners Insurance Policy

As stated above, this should be done periodically. Constant tweaking will ensure that all possible money saving strategies are being taken advantage of. Consider a review:

Annually. Even if no capital improvements have taken place, consider that building material costs and construction labor costs continue to rise.
After a remodeling project. Any physical renovation can add to the replacement cost of the residence. For example, if a couple remodels the kitchen and trades in that tired old Formica for a new granite or travertine countertop and backsplash, the replacement cost goes up along with home equity. Upgrading to an Energy Star refrigerator, dishwasher, water heater, and washer and dryer combo should be considered as well.

6 Ways to Save Money on Homeowners Insurance

Increase the policy deductible. Just as with auto and medical insurance, the higher the deductible, the lower the premium tends to be. It's all a gamble anyway; the question is, what are the stakes? The Insurance Information Institute (III) estimates that, “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.” This refers to things like flood insurance riders.
Beef up home disaster prevention. Just installing smoke detectors will usually reap a savings of about 5%. That's right; the insurance company will pay policy-holders to be a partner in keeping claims costs down. Going one step further, installing an automatic fire sprinkler system will net further savings with many companies.
Adding residential surveillance devices. Installing home surveillance systems such as security cameras have the potential to prevent theft and home invasions. They can also help resolve a crime after it's been committed.
Consolidate insurance policies. The company wants business and will often be open to a “package deal”. Just adding the car policies to the same company is an incentive for them to cut a deal.
Shop for a better deal. If the current insurer isn't in the mood to cooperate, feel free to look for a better deal elsewhere. Just because the mortgage-holder or bank requires insurance coverage, doesn't mean they care who handles it. It's a business, just like a store. As an analogy, if Target won't deal, visit Costco or Walmart.
Add a metal or steel roof and storm shutters. These are more examples where the provider may be willing to risk-partner with the homeowner. A metal roof installation when re-roofing is a big plus, especially in areas where the provider gets a lot of claims for hail damage. The same is true with storm shutters in hurricane or tornado-prone locations.

Keep these budget-shaving tips in mind during these tough economic times. Some of these strategies, such as increasing the policy deductible and updating to reflect new appliances, may also be applicable to renters insurance.