How To Lower Your Homeowners Insurance Premium

Homeowners insurance documents

When you start shopping for home insurance, you soon discover not all insurance companies are alike. In fact, as you begin comparing quotes, you find stark differences in the prices you would be paying to protect your home. However, the good news is that you are not automatically locked into paying high premiums forever and ever. In fact, by being smart during the premium shopping process and in the years ahead, you may be able to pay substantially less for your homeowners insurance than you ever expected. If you want to learn how, our team here at Rollac has some suggestions.

Reduce Your Homeowners Insurance Premium With These Tips

 1.     Don’t Take the First Offer

Like anything else you’re looking to buy, don’t simply take the first offer you get for home insurance. Instead, try working with an independent insurance agent who can get you offers from several companies simultaneously and go online to compare quotes from many different insurers. Once you get a variety of quotes, pick out one you like best. 

Also, don’t shy away from seeking an even bigger discount. By contacting a company and name-dropping other companies in the course of conversation, you may be surprised at how low your insurance costs may be in the end.

 2.     Upgrade Your Home

One of the best ways to lower the cost of homeowners insurance is to upgrade your home, especially in terms of making it less likely to be severely damaged during a serious storm or hurricane. If you choose to have Rollac hurricane shutters installed on your home’s windows, insurance companies will look at this very favorably, and likely will give you a lower rate. Made and tested to meet the highest standards, Rollac hurricane shutters are approved by the Texas Department of Insurance, and meet the requirements of the Florida Building Code.

Installing a monitored security system is another way to upgrade your home and reduce insurance costs, as this could get you a 20% discount on your premium.

Or if you are into “smart” technology, you can install “smart” fire detectors, carbon monoxide detectors, and thermostats, all of which may save you five to 20% on your premium costs.

3.     Raise Your Deductible

If you want to see an immediate impact on lowering your insurance premium month after month, consider raising your deductible. Although you would have to pay more after suffering a loss before your insurance company kicks in and starts paying your claim, your overall savings will likely be very substantial. 

Generally, most insurers recommend their policyholders have deductibles of $500. However, if you feel comfortable raising your deductible to $1,000, your monthly premiums may be reduced by as much as 25 percent.

4.     Don’t Include Your Land Value

When you are shopping for homeowners insurance policies, don’t make the mistake of including the value of your home’s land when deciding which policy you should buy. 

After all, remember that the piece of land your home is located on will not be stolen by thieves or swept away by a hurricane. If you do include your land’s value when seeking quotes, you will almost certainly wind up paying higher monthly premiums.

5.     Bundle, Bundle, Bundle

Finally, try your best to bundle your various types of insurance into one package. For example, try working with a company that will let you bundle your automobile and homeowners insurance.

If you are successful, you can save anywhere from 10-20 percent. Due to the intense competition within the insurance industry, more companies are opting for this, so take advantage of the savings.

What Can Affect the Homeowners Insurance Premium Cost?

  • Year the home was built.
  • Condition of the home’s roof.
  • Quality of the home’s construction (is it up to code?).
  • Special features (swimming pools, hot tubs, spa, jacuzzi).

How is a Homeowners Insurance Premium Calculated?

If you’re wondering why homeowners insurance is so expensive, many factors come into play when premiums are calculated. First, the insurer calculates the “pure premium.” This is done by dividing the losses associated with homes in a certain area by the amount of property value that is insured. Thus, homeowners insurance is based in large part on property value. 

Next, the insurer’s expense ratio is calculated, which includes its administrative costs, commissions, and taxes. 

To arrive at the premium cost paid by customers, an insurer will divide the pure premium by one, then subtract its expense ratio to arrive at the gross premium, which is what you will pay as a customer. 

As to what is a normal amount for homeowners insurance, you can do a quick calculation where you multiply your home’s square footage by how much per square foot it would cost to rebuild. For example, if your home is 2,000 square-feet and it would cost $150 per square-foot to rebuild, you would need dwelling coverage for $300,000.

Does a Homeowners Insurance Premium Increase Every Year?

As to why your deductible is so high and your homeowners insurance so expensive, much of it has to do with how things change from year to year. If your area suffered more natural disasters or other losses, or perhaps property values increased significantly, this could explain why your Texas home insurance is so expensive. 

Since the average cost of full coverage insurance in Texas is almost $1,900 annually, insurers assess the risks of fires, crimes, natural disasters, and other factors when determining premium costs. By negotiating, bundling, implementing safety measures, and shopping around for the best deal, your homeowners insurance can be kept at a reasonable level.

Shop Smart And Pay Lower Rates In Homeowners Insurance Premium

Since it is important to save every dollar you can on insurance costs, use these tips to your advantage when shopping for your homeowners insurance. Whether you take a company up on its offer to bundle coverage or install Rollac hurricane shutters to make your home safe when Mother Nature is in a bad mood, using excellent judgment when shopping for coverage can mean much more money remains in your pocket.