Affordable homeowners insurance

There are a number of ways to keep homeowners insurance costs down and ensure the rates you're paying are fair and affordable.

Pat Howard 1600

Pat Howard

Published August 17, 2018

Let’s face it, you may be paying too much for homeowners insurance. It could be because you’re over-insured, you’re not taking advantage of potential discounts, or it could simply mean your insurer’s rates are unreasonably high.

So how do you find a policy that is both cheap and gets you the financial protection you need? It may start with ensuring that components of your home insurance policy are accurate and up to date, limiting your number of claims, or you could consider bundling your home and auto insurance policies with one carrier to receive discounts.

What affects homeowners insurance cost?

There are several factors that impact rate affordability, as homeowners insurance companies examine potential risks associated with owning a home. Homes viewed as higher risk and located in natural disaster-prone areas, areas prone to break-ins, or simply older homes — are more likely to file claims than newer homes in less disaster-prone areas, and therefore pay higher premiums.

While these cost-factors are circumstantial and shouldn’t necessarily decide whether you purchase a home or not, it's important to understand what determines the cost of your homeowners insurance policy.

Your home’s location
Your monthly homeowners insurance premiums are largely dependent on where you live. If you live in a region prone to extreme weather or natural disasters like tornadoes, earthquakes and flooding, your rates will reflect that. If you live in an area with frequent insurance claims, high population density, or near car accident-prone intersections and roads, that will also impact your rates.

The age of your home

Some older, historic homes are said to have “character” and worth the price of upkeep and renovations, and in many cases this is true, but another thing you need to account for when owning an older home is it’s higher insurance premiums. Homeowners insurance carriers view older homes with, for example, aluminum wiring, older built-in water heaters and piping, and older siding and foundations as high-risk characteristics.

How much stuff you have

This one is pretty basic; the more stuff you own, the more personal property coverage you’ll need, and the higher the rates you’ll end up paying. Certain types of personal property, such as jewelry and expensive keepsakes, have an itemized value limit and aren’t covered by standard homeowners insurance — this may require an add-on or separate jewelry insurance altogether.

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How to get affordable homeowners insurance

When shopping for homeowners insurance and comparing offers from carriers, be sure that you’re examining all of your options carefully and not missing out on better offers. A little research, some good questions, and attention to detail go a long way in ensuring you’re getting home insurance on the cheap.

Understand what your home’s replacement value is

Replacement value is a component of hazard coverage and the amount it would cost to completely rebuild your home. It’s important that this number be accurate, as this is typically the highest limit on a homeowners insurance policy and has a lot of weight on how high or low your premiums are.

If you’re determining the home’s rebuild cost yourself, make sure you’re consulting contractors and builders, installers and roofing companies. If you’re obtaining the rebuild cost from an appraiser, consider getting a second appraiser’s opinion.

Limit your claims

Filing claims results in higher premiums from most insurers and could even result in the insurer dropping you, which makes it more difficult and expensive to get insurance elsewhere. You’ll want to limit your claims to egregious circumstances that don’t jeopardize rate affordability or your ability to protect your assets.

Take a high deductible

Not only will this make your monthly premiums significantly cheaper, but it’ll incentivize you to not file as many trivial claims that generate future premium hikes.

Maintain good credit

A good credit score is a good sign of financial health, and home insurance companies love that, as will your bank account.

Consider declining unnecessary add-ons

The key here is understanding what is required and what is additional. In other words, there are certain coverage options insurers are required by law to disclose, such as flood insurance if you live in a flood zone, or earthquake insurance if you live on a fault line, and certain coverage options that are salesy and not at all helpful to you, the beneficiary.

Yes, you want to make sure all of your assets are protected, but you could also be dealing with an agent who’s overly incentivized by his commission structure to sell you add-ons you don’t need.

Choose the right homeowners insurance company

Seems simple enough, right? Make sure you’re carefully comparing and contrasting carriers when they offer you policy limits on your home.

Carrier A may seem way cheaper than Carrier B, but Carrier A may cover far fewer perils than Carrier B and require you to buy separate insurance for certain perils. At the end of the day, this compartmentalization of peril coverage may result in Carrier A being more expensive than Carrier B.

Homeowners insurance discounts

Many homeowners insurance companies offer discounts if you’re a senior citizen, if you protect your home with safety and security upgrades, make your home more disaster resistant, and if you bundle your home and auto insurance with the same insurer.

Bundling home and car insurance policies

One of the best ways to save on your insurance policies collectively is to bundle them together, and there perhaps isn’t a hotter pair right now than home and car insurance. Dual-policy offerings saved consumers an average of 20% on their home and car insurance policies in 2017, and is definitely worth considering if your focus is affordability.

Interested in bundling? At Policygenius, we have knowledgeable home and auto insurance experts that can help you save while getting the insurance coverage you need.

Homeowners insurance for seniors

Many insurance companies have partnered up with retiree organizations and offered home insurance discounts for seniors and there are a number of options to choose from:

  • Club or group affiliation: AARP members who are retired or work less than 24 hours a week may be eligible for as much as a 10% reduction in monthly premiums.

  • Retiree credits: Retired folks are home more often than working-aged people and more likely present when things go awry, like a pipe bursting. This saves insurance companies money, and the insurers reward seniors with discounts in the 10 to 20% range for their good housekeeping.

Security features and disaster-proofing

Homeowners who go the extra mile to protect their home with burglar alarms, expansive security systems, or safeguards against natural disasters like storms shutters and more fortified windowing may see their carrier reward them with a hefty discount for their foresight.

The biggest thing here is making sure you inform the insurer that you made the upgrades (this can apply to home renovations, too), and follow up to ensure your rates are actually lowered.

Insurance Expert

Pat Howard

Insurance Expert

Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.