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8 Ways to Save Money on Homeowners Insurance

Written by Lauren Jiles-Johnson
6 min. read
Reviewed by Cara Carlone
CPCU, API, AINS, property & casualty licensed agent

Who Needs Homeowners Insurance?

If you have a mortgage, lenders require you to have homeowners insurance. Lenders want to protect their investment if things like fire or severe weather damage your home.

You’re not required to carry homeowners insurance if you’ve paid off your mortgage. But for most people, a home is the cornerstone of their financial health, so a homeowners policy offers significant financial protection. It insures the structure and your belongings in situations such as a natural disaster. The policy also covers you if visitors injure themselves on your property or if you accidentally damage someone else’s property.

Homeowners’ insurance can be expensive, but when you understand the discounts and incentives insurers offer, you can save on your insurance premiums. Here are eight ways to save money on homeowners insurance.

Ask About Discounts

Insurance companies offer discounts for improvements or circumstances that lower the risk of a claim. Each insurer has a custom set of discounts. Ask your insurer if they provide any of these: 

  • Loyalty discount. You may qualify for savings if you’ve been with your insurer for several years. After 3 to 5 years, some insurers reduce premiums by 5% and 10% if you keep your policy for six years or more.
  • Mature homeowners. Retired adults spend more time at home and are less likely to be burglarized. Insurers may offer discounts to homeowners at least 55 years old and retired.
  • Military or occupational discounts. Sometimes, insurers offer discounts to active military members, educators, engineers, or emergency responders. Ask your insurer if they have any discounts based on occupation.
  • Group discount. Some insurance carriers give discounts to groups such as employees of a specific company, professional association members, or alums of major universities. Find out the list for your current or prospective insurer.
  • HOA discount. Homeowners associations have strict standards for home maintenance and upkeep. They may be in a gated community or have private security. All of these factors potentially reduce insurance claims.

Bundle Your Policies

Insurers that sell both homeowners and auto coverage may discount your premium from 5 to 15% if you bundle or buy two policies from them. Beyond the cost savings, an advantage of bundling is managing your insurance policies through a single website or app. Some companies offer only home or auto insurance but work with a partner company to provide a discount. But it’s still important to do your research. Compare the price of a bundle with the cost of policies from two different companies to be sure bundling saves you money. 

Increase your Deductible

A deductible is an amount you must pay out-of-pocket before the insurance company pays on a claim. Let’s say your homeowner’s policy has a $1,000 deductible. If you file a  claim for $10,000 that is accepted, you will pay $1,000, and the policy will cover the remaining $9,000.

Consumers often choose a $500 deductible to keep their costs low. However, the higher your deductible, the lower your premium. So raising your deductible from $500 to  $1,000 could save as much as 25%. 

Some homeowners’ policies have deductibles based on a percentage of the home’s dwelling coverage (Coverage A amount). A home insured for $100,000 covered by a policy with a 2% deductible would have $2,000 deducted from a claim.

Your policy may have different deductibles for certain types of damage. If you live in an area prone to natural disasters, you might have a separate deductible for windstorms and hail. Standard homeowners policies don’t cover floods or earthquakes. You’ll need to purchase a different policy for those risks, which have their own deductible rules.

Secure Your Home

Improving your home security with a smoke detector, burglar alarm, or deadbolt locks will often bring a discount of 5% or more. You’ll save even more if you add a fire sprinkler system and burglar alarm to a monitoring station. Check with your insurer to determine what security systems qualify for a discount. 

Minimize features that could put children at risk. If a child gets injured on items known as “attractive nuisances,” you could be liable.

These include trampolines, playground equipment, and swimming pools.

Take Care of Your Home

Some home improvements make you eligible for insurance savings. Updating your home’s plumbing, heating, or electrical systems reduces the fire or water damage risk. Installing devices to detect leaks or backwater valves to prevent sewer backups may reduce premiums.

If your roof is in poor condition, you could be quoted a higher rate or even denied coverage. On the other hand, reinforcing your roof or adding impact-resistant roofing could lead to savings.

In areas prone to natural disasters, adding hurricane shutters and siding and securing your foundation against earthquakes may bring savings.

When shopping for new homeowners insurance, check which improvements earn a discount. Inform your agent of any renovations completed in your home if you’re eligible for a rate reduction.

Increase Your Credit Score

An estimated 85% of homeowners insurers use credit-based insurance scores in states that allow it. Insurance companies use these ratings to underwrite and set a customer’s pricing. Consumers with poor credit ratings might not be eligible for coverage, or they will pay higher insurance premiums. A credit score below 650 can cause premiums to increase as much as 91%. 

In most states, the insurer must inform you if the information on your credit report results in a higher rate. If so, check your credit report to be sure the information is accurate.

To improve your credit score, always pay your bills on time. Limit your credit usage to 30% or less of your available credit. Also, avoid opening multiple accounts in a short period.

Consider Skipping Small Claims

Try not to file small claims just a few hundred dollars above your deductible. This will likely lead to a premium increase. Homeowners may not realize it, but many insurers offer a claims-free discount if you go a period, such as three years, without filing a claim. Even a small claim will cause you to lose that discount. 

Making multiple claims can lead to a sharp premium increase or your insurance provider may not renew your policy. A 2021 survey found a 50% average premium increase for policyholders with two water claims and a 60% average increase for two fire claims.

Insurance companies can review your claims history from an insurance database. If you apply for homeowners or auto insurance, underwriters can see all claims filed for your property for the past seven years, including those from a previous owner. Multiple claims on your report make you appear to be a higher risk to an underwriter, resulting in a higher premium.

Shop Different Policies

Depending on the insurer, the price of homeowners insurance can vary by hundreds of dollars per year. Shop around to find the best deal and quality service. Here are a few things to consider.