Get a list of discounts
Insurance companies offer discounts to homeowners for improvements that make their homes a better risk. These include safety features such as indoor sprinklers, smoke detectors and dead bolt locks. Discount programs change frequently, and we can't list all the possible discounts here. If you haven't spoken to your agent within the past year or you've made a major home improvement, you may be missing out on significant discounts.
Increase your deductible
Raising your deductible—the portion of a claim that
comes out of your pocket—is the easiest way to cut
your insurance cost. Bumping your deductible from
$500 to $1,000 can save you up to 25 percent on your
premium. Raising it to $2,500 can save you 30 percent,
and raising it to
$5,000 can save you
35 percent or more.
The downside, of
course, is that
you’ll be stuck with
a bigger bill if you file a claim. But consider this: If you
raise your deductible from $500 to $2,500 and your
premium decreases by $500 a year, your savings will
cover the deductible increase in four years. If you put
those savings aside, you’ll have a cash cushion to pay
the higher deductible. And after the first four years,
you’ll save $500 every year without any extra financial
risk. DIYers can often offset the impact of a higher deductible by doing part of a repair project themselves.
Photo courtesy of Jupiter ImagesIf your dog bites someone, it can raise your rates!
Situations That Raise Rates
- A swimming pool (especially with a diving board), a hot
tub or a trampoline.
- A dangerous condition on your property (like cracked
steps or a low spot that collects water or ice) that could
injure someone. If the injured party files a claim with his or
her insurance company, your rates will rise.
- Having a pit bull, Rottweiler, Doberman Pinscher or wolf
mix. These breeds affect your insurance rates because dog bites cost insurers hundreds of millions annually.
Replace washer hoses
Washing machine hoses that leak or even burst are a common cause of water damage. Some insurance companies offer a discount of up to 10 percent on your premiums if you replace the rubber hoses on your washing machine with no-burst stainless steel hoses (available at home centers and hardware stores). In 10 minutes, you could save five times the cost of the hoses on your next bill, but this is a smart move even if your insurer doesn't offer
Drop additional structures coverage
Most insurers assume your house isn't the only building on your property. If you don't have a stand-alone shed, garage or other structure on your property, remove this coverage
and save yourself 5 percent.
Inform your agent about upgrades
Insurance companies like to insure homes with newer plumbing and electrical systems as well as burglar alarms and sprinkler systems because these features reduce the risk of fire and water damage. If you make upgrades to any of these systems in an older home, let your insurance agent know. One homeowner we spoke with called her insurance agent to report some recent plumbing upgrades, and after a 15-minute conversation, the agent raised her overall coverage
by $50,000 and reduced her annual premium by $400.
Think twice before filing a claim
Every time you file a claim, you risk higher insurance rates in the future. So in the long run, filing a claim can cost you more than you receive in a payout. Paying for a smaller loss yourself will almost always cost less than the premium increase you'll face later. A good rule of thumb is don't file a claim if it's worth less than $1,000 over your deductible. Statistically, if you file two claims in a three-year period, or make claims related to maintenance issues such as a chronic leak or some missing shingles, you risk triggering a rate hike or worse. Your insurance company may even drop you completely. Just inquiring about a claim (without even
filing it!) could raise your rates.
Make automatic payments
Many insurance companies will discount your premium 2 percent if you pay your premiums by "automatic withdrawal"
from a bank account.
Beef up your garage door
Strong winds often wreck garage doors. So a tougher door might cut your premiums by 10 percent. You have two options: Install a new hurricane-resistant garage door, or use a retrofit kit with horizontal and vertical bracing to strengthen the existing door. A retrofit solution for a double-door garage can be ordered online or special-ordered from a home center. If you have a $1,000 premium, your payback
would be about five years.
Install trouble detectors
Some companies will discount your premium 2 to 5 percent if you have safeguards in place to warn of plumbing failures. Battery-operated or plug-in temperature sensors detect furnace breakdowns and the resulting frozen and bursting pipes. Leak detectors use wireless or wired sensors to sound an alarm (battery-operated models), or can be wired to an automatic shutoff valve on your main water line when water touches the sensor. For purchase info, search online
for "leak detectors" and "temperature sensors."
Two Claims to Avoid
Think twice before filing a claim based on dog bites or water damage. These two claims are the most likely to trigger a premium increase. Dog bites are the largest single cause of home policy claims. Water damage claims are red flags to insurers because of the costs of eliminating mold
and repairing chronic plumbing problems.
Shop around every five years
If you've had the same insurer for more than five years, it's worth getting quotes from three different insurers to compare prices and coverage. Many insurers offer a "longevity" discount of about 5 percent if you've been with the company for three to five years, and 10 percent for six years or more. Make sure you're getting this longevity discount, and
take it into account when you compare prices.
Choose fire-resistant siding
If you're installing new siding, install Class A rated fire-resistant materials such as metal, fiber-cement shingles and clapboards, and masonry. Using these materials can reduce your premium by up to 20 percent, especially in dry areas of the country that are more susceptible to fire
Monitor your credit score
Your credit score has a huge impact on your insurance costs. A poor credit score could increase your insurance premium by 35 to 40 percent or possibly result in the cancellation of your policy. On the other hand, if your credit score has improved since your policy was issued, have your agent refigure your premium based on your improved credit rating. Ask your insurer when it last updated your credit score records and monitor your credit report each year by getting a free copy from the top three credit reporting companies.
Choose a tough roof
Standard asphalt shingles take a beating during wind and hail storms. So insurance companies offer big discounts (up to 45 percent) for tougher materials. Before you choose a new roof, talk to your agent to learn about the exact discounts for materials other than standard asphalt. In most cases, metal roofing gives you the largest discount, but it also costs two to four times as much as standard asphalt shingles. For a less expensive roof that still qualifies for a discount, consider heavier-grade Class 4 modified asphalt and shake shingles, which come with a 30- to 50-year limited warranty and may be less expensive than replacing
a storm-damaged roof.
Fasten shingles securely
If you're planning to get new asphalt shingles and you live in a high-wind zone, check with your agent first. You may get a discount simply by using six nails or staples per shingle instead of four, which increases the wind-resistance rating of your roof. Make sure you or your contractor fills out
the correct paperwork, and then send it to your insurer.
Install storm shutters
If you live in a hurricane-prone area, installing wind-resistant shutters can save you up to 30 percent on the hurricane portion of your premium (often about 60 percent of the total premium in coastal areas), which means an overall savings of almost 20 percent. For an average home, basic metal shutters would pay for themselves in three to five years. To find storm shutters, go online and search "storm shutters" or
Stay Safe—and Save!
Install smoke detectors
Going without smoke detectors on every floor
of your house is just plain irresponsible. Not only do they
cut your chances of dying in a fire in half, but your homeowner’s
insurance company may offer a premium discount
of about 5 percent if you have them in your home. Also,
over 60 percent of house-fire fatalities occur in homes
that are missing smoke alarms or have disabled alarms or
alarms with dead batteries. Test your smoke alarms twice
a year and replace units that are more than 10 years old.
Install a CO detector
Carbon monoxide detectors (available at home centers)
are mandatory in some states. This is an inexpensive way
to protect your family from this
deadly, invisible gas. Installing
them shows your insurance company
that you’re serious about
home safety, and it can earn you
a discount of about 3 percent.
Have fire extinguishers on hand
Having a fire extinguisher on each floor of the house
gives you a fighting chance at putting out a small fire so
the whole house won’t burn down. Your insurance company
may reward you for that with a 5 percent discount.
Install dead bolt locks
A door without a dead bolt is an invitation to burglars.
Install one on all exterior doors and cut your premiums
by at least 5 percent.
Buy a backup generator
A backup generator is a good idea if you live in a storm-prone
area. In case of long-term power outages, a generator
will keep your refrigerator, fans and dehumidifiers functioning
to protect your food and prevent mold and rot in
case flooding occurs. It can also save you 2 percent on your
premium. A generator won’t pay for itself in insurance savings,
but it will offset the
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Tell your insurer when you retire
If you're over 55 and retired, you may qualify for an additional 10 percent discount. Insurers figure that you'll be around the house more and are less likely to be burglarized. You'll also be more attuned to disasters in the making and
have more time for home maintenance projects.