Tips To Save On Home Insurance Premiums
From wildfires to floods, the past few years have brought a historic number of devastating climate and weather events to the United States. In 2023 alone, there were 28 individual weather-related disasters that caused at least $1 billion in damages each.1
These events triggered a huge influx of home insurance claims, and analysts expect the increase in both catastrophes and claims to continue. Adding to the problem, construction labor and supply costs have risen, making it more expensive to repair affected homes. Consequently, home insurance rates have surged: In 2024, Bankrate reports, premiums are already up an average of 23%, following double-digit increases the previous year.2,3
In disaster-prone regions, the situation is even more challenging. Some insurers have pulled out of risky areas entirely, and many of those that still offer policies in high-risk areas have doubled or even tripled their premiums.4
For most homeowners, comprehensive home insurance coverage is crucial for financial security—but massive rate increases can turn a once-affordable home into a financial burden. They can also pose a serious challenge for sellers. A home insurance policy is typically required to get a mortgage, and, in some hard-hit regions, we’re seeing sales fall through or homes sit on the market because insurance policies are unattainable or too expensive.5,6
But don’t panic! While these broader trends may be out of your control, there’s still plenty you can do to save. Here are our top six strategies to slash insurance premiums while maintaining the protection you need.
1. SHOP AROUND
When it comes to major purchases like home insurance in Denver, it’s wise to gather multiple quotes. We suggest comparing at least three estimates before making your decision. Obtain quotes directly from insurers or through an independent insurance broker7. Providing detailed information about your property and claims history is crucial in this process.
Prior to selecting a policy, carefully review the terms. Some policies may initially seem appealing but could have significant coverage gaps. Consider the coverage amount for repairing or replacing your home, as well as any limits on personal possessions and liability claims. Additionally, researching feedback from policyholders (we recommend Trustpilot) and ratings from reputable sources such as the Better Business Bureau and J.D. Power is recommended.
If you need assistance in choosing the right policy, feel free to contact Just Livin' Realty Group for a list of reliable insurance professionals in Denver.
2. INCREASE YOUR DEDUCTIBLE
When considering insurance costs, the size of your deductible plays a pivotal role. The deductible, the amount you must pay before your insurance coverage applies to a claim, significantly influences your overall insurance expenses.
Opting for a lower deductible, such as $500, results in higher monthly premiums. Conversely, selecting a higher deductible, like $2,500 or even $5,000, can lead to lower monthly costs. Some insurance providers may offer the flexibility to set different deductibles for specific types of claims, such as those stemming from named storms or natural disasters.
If you are confident in your ability to cover the initial payment from your savings when necessary, choosing a higher deductible can yield substantial long-term savings. For instance, according to Nerdwallet, increasing your deductible from $1,000 to $2,500 could potentially save you an average of 11% annually.8
3. BUNDLE MULTIPLE TYPES OF INSURANCE
Insurers in Denver want to earn your business and often provide substantial discounts for bundling your home and auto insurance policies. This means combining both policies under one provider. Some insurers go further by offering additional savings when bundling RV, boat, jewelry, and life insurance policies as well.
According to US News and World Report, customers who bundle home and auto insurance can typically enjoy savings between 10-25% on their monthly premiums. Bundling not only saves you money but also simplifies your paperwork. Additionally, in certain situations, such as both your home and car being damaged in a storm, bundling may allow you to pay just one deductible when filing a claim.
Before committing, remember tip #1 and make sure to compare quotes from different insurers. While bundling can be cost-effective, it’s essential to note that the best deals vary among companies. Ensure that the bundled coverage meets all your insurance needs before finalizing your decision.
4. ASK ABOUT AVAILABLE DISCOUNTS
Did you know that being a nonsmoker could make you eligible for a discount on your home insurance policy?8 Some insurance companies offer surprising incentives to policyholders who are at a lower risk of filing a claim. For nonsmokers, this is due to the reduced risk of a home fire.
Additionally, many insurers provide discounts to military families, homeowners in specific professions like teachers or engineers, and new homebuyers. You may also be able to save money by choosing paperless billing or paying your premiums annually in advance.10
Discount offerings vary widely among insurers, so it’s advisable to inquire with a representative to receive a comprehensive list of available discounts. This way, you can explore potential cost-saving opportunities.
5. AVOID MAKING SMALL CLAIMS
Concerned about potential increases in your insurance premiums down the line? Consider refraining from making claims unless absolutely necessary. Many insurance providers offer discounted rates to customers who maintain a claim-free record for a certain period. Making multiple claims typically leads to significant premium hikes. In fact, an excessive number of claims could even lead to the nonrenewal of your policy.
Given that even a slight premium increase can accumulate over time, it may be a smarter financial choice to cover minor home damages, such as a few missing roof shingles after a windstorm, out of pocket instead of filing a claim.
If the repair costs are lower than your deductible, it’s financially impractical to file a claim. Similarly, if the costs are only slightly higher than the deductible, it’s often more advisable to self-fund the repairs. Remember to carefully review your policy terms before proceeding with a claim. Even claims that get denied can work against you, making it unwise to file for damages that are clearly not covered.
If you encounter such a scenario, do not hesitate to contact us for a list of cost-effective professionals who specialize in home repairs.
6. BE STRATEGIC ABOUT HOME IMPROVEMENTS
When considering a home improvement project, it’s essential to look beyond insurance premiums as the sole determining factor. Understanding how renovations can potentially affect your rates, either positively or negatively, is crucial.
For instance, certain upgrades and repairs have the potential to lower your insurance premiums by enhancing the safety and resilience of your home. These enhancements may reduce the risk of specific types of damage, ultimately leading to cost savings.12
- Upgrading your electrical system
- Updating your plumbing
- Installing a monitored security system
- Adding a fire sprinkler system
- Replacing the roof
On the other hand, some upgrades can raise premiums significantly, either because they increase the value of your home (and therefore the cost to replace it) or because they pose a hazard. These include:12
- Installing a swimming pool or other water features
- Building an extension or expanding your living space
- Upgrading materials, like flooring or countertops
- Adding a fireplace or woodstove
Whether or not your planned renovations are on either of these lists, it’s wise to inform your insurer about changes you make to your home—otherwise, you may risk gaps in coverage. And you’re always welcome to check with us before you begin any home improvement project to find out how it could impact the value and resale potential of your home.
BOTTOMLINE: Protect Your Investment Without Sacrificing Enjoyment of Your Home
Ensuring your financial security with the right insurance coverage at the best value is crucial in today’s market. While seeking cost-effective options, cutting corners on home insurance is not advisable.
For personalized guidance on your specific risks and required coverage, we suggest consulting a seasoned insurance expert. We are here to link you with a reputable advisor from our network. Additionally, if you are contemplating a home renovation, feel free to contact us for a complimentary consultation on its potential impact on your property value and insurance premiums.
This content is for informational purposes only and represents an opinion. It is not a substitute for professional financial, legal, insurance, or tax advice. Please consult the relevant experts to address your individual requirements.
Sources:
- Climate.gov –
https://www.climate.gov/news-features/blogs/beyond-data/2023-historic-year-us-billion-dollar-weather-and-climate-disasters - Bankrate –
https://www.bankrate.com/insurance/homeowners-insurance/homeowners-insurance-cost/ - Policygenius –
https://www.policygenius.com/homeowners-insurance/home-insurance-pricing-report-2023/ - CNN –
https://www.cnn.com/2023/09/20/business/insurance-price-increase-risk-climate-first-street-dg/index.html - BBC –
https://www.bbc.com/news/business-66367224 - US News –
https://realestate.usnews.com/real-estate/articles/how-climate-change-could-impact-your-home-value - Nerdwallet –
https://www.nerdwallet.com/article/insurance/how-to-shop-for-homeowners-insurance - Nerdwallet –
https://www.nerdwallet.com/article/insurance/save-on-homeowners-insurance - US News and World Report –
https://www.usnews.com/insurance/homeowners-insurance/how-to-bundle-home-and-auto-insurance - Marketwatch –
https://www.marketwatch.com/guides/insurance-services/how-to-save-on-homeowners-insurance/ - Bankrate –
https://www.bankrate.com/insurance/homeowners-insurance/when-to-file-a-home-insurance-claim/#when - Bankrate –
https://www.bankrate.com/insurance/homeowners-insurance/home-insurance-and-renovations/