Secrets to Lower Home Insurance Premiums


home insuranceWhen you're hunting for a house, the cost of home insurance is probably at the bottom of your shopping list. But you should probably move it up a few notches. Sue and Joe Davis learned this when they went house hunting recently. While Sue loves old Victorian homes, he loves new, freshly built ones. Obviously, maintenance and renovations are cheaper on the latter, but the Davis' Realtor told them that buying a newer home could also save them money on home insurance.

Why? For starters, insurance policies are cheaper if a home's electrical, heating and plumbing systems are less than 10 years old. The Davises are looking in California, so buying a wood-frame home in that earthquake-prone area could also save them money. Factors like that could lower their insurance premiums by 10 percent, according to the Realtor.

Here are more ways to lower your home insurance premiums:


1. Consider the costs before buying a home

As mentioned above, think about the cost of insuring that dream home before you buy it. For example, the material it's built of is a significant factor in a homeowner's policy -- and it varies depending on where the house is. In the East, a brick house can have a lower premium because it's more wind resistant, while in an earthquake-prone area, a wood-framed house is more likely to stand. You may also pay less if you buy a house close to a fire hydrant, or in a community with a professional fire department instead of a volunteer one.

Jeanne Salvatore, spokeswoman for the Insurance Information Institute, recommends checking the CLUE (Comprehensive Loss Underwriting Exchange) report of the home that you are thinking of buying. It lists the insurance claim history of the property and can help you judge what problems the house may have that could boost home insurance premiums. You can order a CLUE report online at LexisNexis.


2. Shop around

First, do some online price comparisons. Get rate quotes from several insurance companies using websites like InsWeb or NetQuote. But don't settle on the cheapest quote. Make sure the insurer that you ultimately decide on is above board. Contact your state's insurance department to see if any complaints have been filed against the company, and check with rating companies like A.M. Best and Standard & Poor's to see if it's financially solid.

3. Raise your deductible

Like most other insurance plans, the higher your deductible, the more money you'll save on your premiums. Jeanne Salvatore says that most insurance companies now recommend a deductible of at least $500. If you can afford to raise it to $1,000, you can save as much as 25 percent.

Real Estate
Essential How-To-Guides on AOL Real Estate: Home Buying, Selling, Renting, Moving and Home Improvement
4. Buy your insurance policies from the same company

"Bundling your auto and home insurance policies with the same company can cut your bill by 15 percent," says Jean Chatzky, the "Today" show financial advisor and contributor to AOL's personal finance blog WalletPop. Just double check that the combined price is lower than buying different coverages from different companies.

5. Insure the house, not the land

Your home is at risk from theft, fire and other perils, but the land it sits on is not. So don't include the land's value when you're deciding how much home insurance you need to buy.

6. Make your home more safe and secure

Find out from the insurance company what you can do to make your home more disaster-proof. By adding storm shutters, reinforcing your roof or upgrading your electrical system, you could save on premiums. Also, your insurer could offer discounts if you burglar-proof your home, from 5 percent each for deadbolt locks and smoke detectors to up to 20 percent for a sophisticated security system.

7. Check your policy once a year

Don't spend money for coverage that you don't need. If you just sold a valuable painting, you won't need the same coverage amount. On the other hand, you'll need to increase coverage after you add an extra room to the house.

8. Keep your credit clean

These days, insurers are creating an "insurance score," says Salvatore." An insurance company uses credit information, together with your insurance history, to predict whether you are more or less likely to file a homeowner's claim. This allows them to provide insurance to more people and to offer it at a lower cost to those who qualify." That means a solid credit history can definitely cut your home insurance costs. So pay your bills on time, keep your credit card balances as low as possible and check your credit record regularly to make sure that all the information is accurate and up to date.


For more home-insurance tips see these AOL Real Estate guides:

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

Reader Comments (3)

3 Comments / 1 Pages

AOL RealEstate on Facebook