Best Homeowner Insurance Rates
There are a lot of variables that come into play when talking about homeowner insurance rates. First there is the home itself. What is the home appraised at and what are the risks? Is it in a flood zone, have a wood-burning stove, or is neighborhood crime a factor? And then there is the homeowner themselves. Do they have a good credit score, a history of late payments, or a new homeowner?
Most home buyers are only interested in getting the best homeowner insurance rates, but what they don’t know is that there’s a lot of factors they can change to help lower that rate.
How To Save On Home Insurance
Unlike renters insurance, which is pretty straight-forward, home insurance will require a questionnaire and possibly a home inspection.
Below are some of the things you can do to keep your premiums lower.
- Plan ahead and keep insurance costs in mind when buying a home.
- Apply online and shop around for the best rates.
- Research the factors that can lower the rate (i.e. a neighborhood watch program).
- Find a reputable insurance agent or broker.
- Consider the deductible you will be paying.
- Save money by getting auto insurance from the same company
- Don’t overstate the rebuilding costs.
- Avoid placing small homeowner insurance claims.
- Stop smoking today.
- Make sure the coverage for possessions isn’t too high or too low.
Get The Best Homeowner Insurance Rate Possible
Below we provide a bit more detail on each of the factors listed.
#1. Keep Insurance Costs in Mind When Buying A Home.
Some factors that can determine the premium you’ll pay for homeowners insurance include:
- Type of construction and materials (i.e. mostly brick vs. wood)
- Age of the home. Is it a pre-war home?
- If your home is in a hurricane, earthquake, or flood-prone area, you can expect a much higher monthly premium
- Is it near a fire hydrant or fire station in case of emergency?
- Has your home passed inspection code? Is your in-ground pool far enough from the door?
- Is it constructed with a material suitable for your area or climate?
- Is there evidence of termite damage in the home, or other type of infestation?
Before you buy that Prewar fixer-upper, remember to check on homeowners insurance rates before buying. That Victorian-style house may not to be such a great deal after all.
#2. Research Homeowner Insurance Rates Online.
Technology has made applying for homeowners insurance super fast and easy. After filling out a short questionnaire, you can view dozens of homeowner insurance quotes. You can even filter by premium price and compare eye-to-eye which policy offers the best homeowner insurance rate.
Some of the U.S. homeowner insurance companies we recommend:
#3. What Affects My Homeowner Insurance Rate?
There are a lot of things that come into play if you’re trying to get the best homeowner insurance rate. Below are a few that I found online. Also by applying online, you can see the questionnaire and tailor your home for the best answers.
- Do you have a wood-burning stove?
- Is there a neighborhood watch program in place? (maybe start one!)
- Install security cameras or home security system.
- Consider getting rid of your trampoline.
- If you’re looking to get a dog, get a less “aggressive” breed.
- Is there a fire hydrant in the home?
- Do you use green energy rated products?
#4. Find A Trustworthy Insurance Company And Agent.
It’s possible to get the lowest homeowners insurance rate out there, but it will do you no good if the insurance company goes out of business when you make a claim. That’s why it is a good idea to conduct your own research of the insurance company and policy you plan to buy. Some good resources for doing this are your state department of insurance, the BBB (Better Business Bureau) or on A.M. Best.
The state department of insurance has up-to-date info available on licensing status, and actions taken against insurance companies by the state. Check with the BBB for info about consumer complaints or the financial status of insurance companies.
A good insurance broker can help you find the best rate too. Think of them like an accountant for taxes. You can do it yourself, but it’s better to have an experienced consultant.
If you can find a homeowners insurance policy with a solid, well-known company, you can stay with that company for many years. This may enable you to qualify for a discount on your premiums.
#5. Consider Your Deductible
Your homeowners deductible can greatly affect the monthly premium you will end up paying. If you change from a $500 deductible to a $1,000 deductible, you may save up to 25 percent on your monthly premium.
You should also decide if you want a homeowner insurance policy to cover all property damages, or just major ones. If your home is mostly unoccupied, you might want to add-on a vacant home insurance policy.
If you want a comprehensive homeowners insurance policy, a low-deductible plan is your best option. If you want to save money now, a higher deductible plan – where you assume the risk for smaller claims – will be the type of policy you want.
#6. Save By Getting Auto and Homeowners Insurance
If your auto insurer offers homeowners insurance as well, you may be able to save 10-15% by bundling your insurance premiums with a multiple-policy discount.
In general homeowners pay less money for car vs. renters. This is because homeowners are statistically better at managing their personal finance, and therefore are less risky. Statistically a homeowner is less likely to file an auto insurance claim vs. renters.
FYI: Insurance agents may quote you a bundle discount if you find a better rate. An insurance broker will take a commission, but overall will recommend the best value option.
Further discounts may apply if you purchase life insurance through the same insurer!
#7. Do Not Overstate Your Home’s Rebuilding Cost.
There’s a big difference between the price your home is appraised at vs. how much it will cost to rebuild or replace. Since the value of your land must be taken into consideration, it is unnecessary to insure the land from fire, extreme weather or theft.
You can save money by insuring only the value of the home, not the land.
#8. Avoid Placing Smaller Claims.
Getting the best homeowner insurance rate requires some give on your part.
If possible try to avoid making small insurance claims that will cause your future insurance rate to go up. While it is nice having financial help for small home repairs, in the long-run you’re better off paying out-of-pocket and avoiding a homeowner insurance rate increase next year.
#9. Stop Smoking.
You should stop smoking for the obvious reason, but a lot of people don’t know that it affects home insurance rates as well. According to the U.S. Fire Administration (USFA), home fires caused by cigarettes (and e-cigarettes) are steadily becoming more rare. The bad news is that fires that start because of a cigarette are more serious and deadly.
Cigarettes have a death rate that’s 4X higher vs. non-smoking, residential fires. This is likely because fires occur when the smoker falls asleep, allowing the cigarette to light highly flammable material (i.e. bedsheets, mattresses).
Because of careless smoking, most insurance companies charge a higher insurance premium for a home with a smoker vs. non-smoker.
Read the report on electronic cigarette fires.
#10. Replacement Cost vs. Actual Cash Value
When buying home insurance you’ll get to choose between, replacement cost vs. actual cash value.
- Replacement Cost – pays the full replacement cost of a home and contents (most expensive).
- Actual Cash Value Coverage – pays the depreciated value of a home and contents (less expensive).
Each type of policy also has a coverage limit and deductible. A coverage limit is the most amount of money your policy will reimburse you. A deductible is the amount of money you pay out-of-pocket before the insurer covers the claim.
Pro Tip: When you take an inventory of possessions it’s beneficial to take a photograph. Also include details such as the serial number, make and model & year purchased. For your most expensive items, check online to see what the current price range is and record the website and date checked. Attach any official documentation such as receipts or appraisals.
Some individuals find they have over-insured their home and its contents, and others find their coverage is not suitable for the items they have purchased over the last year. And remember… cash value coverage pays only the depreciated value, not what you paid for it 5-years ago.
How To Get The Best Homeowner Insurance Rate
If your home is protected from fire, theft, and natural disasters you are going to be less likely to make a homeowners claim. Insurance companies offer better rates for various home safety devices such as “smart home” Wi-Fi cameras, burglar alarms, smoke detectors, carbon monoxide detectors, and even dead bolt locks.
Also, if you are building a new a home, it is a good idea to make sure that the building material is suitable for the area in which you live. For example, if you live in an earthquake zone, your home should be built using materials that can withstand an earthquake.
If you’re paying to install a hard-wire security system, check with your insurance company before you buy and ask if the discount will apply. They may have certain conditions or security system companies that they prefer.
And for those who have fallen on hard economic times (i.e. laid off, furloughed), programs like JumpStart Seattle and HUD Homeowner Assistance are worth checking out. HUD’s single-family mortgage insurance may be able to help lower your monthly insurance payments.