Homeowners Insurance Discounts: 9 Ways to Save Money
It’s home, sweet home — until you get socked with a hefty bill for your homeowners insurance, that is. But the good news is that common discounts can cut the cost of your coverage.
In fact, it’s possible to reduce your home insurance premiums by almost a third if you qualify for multiple discounts.
Insurers offer breaks on your bill for a variety of reasons — such as a reduction in the risk that you’d file a big claim, says Chris Hackett, director of personal lines policy for the Property Casualty Insurers Association of America. In other cases, it’s to keep your business, he says.
Here are 9 common home insurance discounts you can receive and how much money they can save you.
1. Bundle Your Home & Auto Policies Discount
Buy your home, auto and other insurance from one company to save big, says Jack Hungelmann, an insurance agent in Minnesota and author of “Insurance for Dummies.” Insurers offer this discount so you’ll be less likely to leave, Hackett says. “If you just had your auto insurance with Geico and you wanted to go get some quotes, it would be really easy for you to move,” he says.
Bundling your home and auto insurance policy typically produces savings around 20% and up to 30%, according to Allstate. In some cases, total savings can add up to $500 or more per year. “You can save a pretty good chunk of money,” Hungelmann says.
2. New Roof or Special Materials Discount
Getting a new roof is pricey, but an insurance discount can put a little bit of that cash back in your wallet. A new roof is much less susceptible to wind damage, Hungelmann says, adding that wind can catch and pull off loose shingles on older roofs.
Some insurers offer a discount for using certain impact-resistant roofing materials, usually certain types of asphalt shingles that protect against hail damage, Hackett says. Having these types of roofs can save you 15%.
3. Home Security System Discounts
If you have a service that monitors your home 24/7 for fire and burglary, you can shave about 15 percent off your premium, Hackett says.
“This reduces the likelihood of a giant fire or burglary loss,” he says. You may also get discounts for smoke alarms or sprinklers.
But an alarm system might run $30 a month, so it could end up costing more than the $150 or so it will save you, Hungelmann says.
But, also consider the fact that you’re reducing your chances of a big claim that could cost you the amount of your deductible. “I highly recommend it,” Hungelmann says of getting a smart home security system for home insurance discounts.
This is why it’s important to know exactly what homeowners insurance covers under your policy.
4. Raising your Deductible Discount
Bumping up your homeowner insurance deductible from $500 to $2,000 can save you an average of 16%, according to a study commissioned by insuranceQuotes.com. A deductible increase can save. you a good amount on your overall costs if you are someone who doesn’t intend to have a lot of future claims which is often the case with a newer home.
If you were to change your deductible from $500 to $1,000, an average homeowner could save $150 a year.
And if you can swing raising your deductible to $2,500, you can save as much as 25%, depending on which state you live in and your insurance policy variables. These discount savings really add up, especially if you have a home worth $200,000 to $300,000 or more. You need to make sure to budget so that your deductible will never be so high that it’s unaffordable for your budget should you need to make a claim.
It should be something that may pinch a little, but you can come up with the money.
5. Claim-Free Discounts
Some home insurance companies will trim the premiums of policyholders who haven’t had a claim, Hackett says. For example, Nationwide offers up to 20 percent off for claim-free policyholders. The less claims you make on past homeowners insurance policies, the better you look from a business stand-point in the eyes of an insurance company.
6. Auto Pay Discounts
You may be able to get a small discount of about 5 percent by setting up your payment as an automatic deduction from your bank account, Hackett says. Setting up auto pay helps to ensure the policy doesn’t accidentally cancel if you forget to pay, which creates an administrative hassle for the insurer, Hackett says.
7. Newly Built Home Discounts
If your home is newly built, you’re less likely to have something go wrong — like a pipe bursting or an electrical fire — that could result in a big claim.
“That’s more likely to happen in an older home,” Hackett says. Discounts vary by insurer, and generally apply only to brand-new homes, he adds. The discount might stay on the policy for several years, decreasing as the home ages. For example, a 10 percent discount might drop to 5 percent when the home hits 5 years old, Hackett says.
But you could save as much as 30 percent, according to Nationwide.
8. Senior & Retired Persons Discounts
Some home insurers offer discounts for retired policyholders, Hackett says. For example, Allstate offers 10 percent off for people 55 and older.
“Typically, retired folks spend more time at home,” Hackett says. “So if a pipe bursts or somebody tries to break into the house or a fire breaks out, they’re right there most of the time.”
That helps reduce frequency and severity of certain types of losses, he says.
But if you qualify for many of these discounts, don’t expect too steep a premium drop. Insurers have overall limits on how much your policy can be discounted — usually a cap of about 30 percent, Hackett says.
But don’t leave money on the table. “Ask about all the available discounts,” Hackett says. “It’s good to make sure you’re getting the most you can.”]
9. Loyalty Discounts
Some home insurance companies will give discounts if you are a loyal customer. If they know you are a customer who has been insured by them for a long time, they see the lifetime value of you as a customer and will often offer a discount for staying with them after some seniority has been built up with them.