If saving money is the goal for 2018, you may be envisioning the next 11 months as a time of self-deprivation. However, you might not have to give up your morning latte to keep more cash in your wallet. You could try lowering the premiums on your homeowners insurance instead.
“All the insurance companies think they have some sort of secret sauce,” says Michael McCloskey, associate professor of risk management and insurance at Temple University. That means every company has their own system for rating policies and setting premiums.
While there is no one-size-fits-all method for reducing premiums, experts say the following seven strategies work to cut costs in many cases.
[Read: The Risks of Buying Cheap Insurance.]
1. Ask for the discounts you deserve. Longtime policyholders may assume they automatically get new policy credits and discounts as they become available. However, that’s not necessarily true. “The biggest mistake people make is thinking they are getting credits,” says Michael Crowe, CEO and co-founder of insurance ratings website Clearsurance. “You can’t assume you’re getting a credit unless you ask for it.”
For consumers hoping to save money on homeowners insurance premiums, the easiest way to get a price break may be to simply ask what discounts are available and whether they are being applied to the policy.
2. Keep your credit score strong. State laws vary, but most allow insurers to factor credit scores when determining policy rates. Right or wrong, insurance companies may see the score as a barometer for a person’s sense of responsibility. “Someone with good credit may be more likely to shovel their walkway or remove snow from their roof,” McCloskey says is the rationale used by insurers. In turn, these actions can help reduce the chance of a claim.
Longtime policyholders may have bought their insurance before the use of credit-based insurance scores became widespread. In those cases, someone with good credit may be able to lower premiums by asking that their policy be re-rated to include their score.
3. Adjust coverage details, if needed. Nancy Albanese, vice president of personal insurance for insurance services firm Powers Craft Parker & Beard, says people should resist the temptation to cut corners on their coverage. “We would never recommend someone strip down their coverage to save money,” she says.
However, that doesn’t mean there isn’t room to adjust details. For instance, most policies include a provision to include other structures on a property at a level equal to 10 percent of the coverage amount on the primary dwelling. On properties without additional structures or with very inexpensive ones, asking for a reduction or elimination of this coverage can save money.
Depending on the company, changes to personal belongings and liability coverage may be made as well. However, Albanese urges caution and recommends homeowners always maintain coverage that will pay for the replacement cost of their dwelling and belongings if destroyed.
[Read: Hidden Holes in Your Homeowners Insurance Policy.]
4. Increase your deductible. Like having a good credit score, McCloskey says a higher deductible can indicate a sense of responsibility to insurers. The deductible is the amount of a claim that a policyholder must pay out of pocket. “The insurance company knows that when someone increases their deductible, they are confident in themselves,” McCloskey says.
Those with a higher deductible may have money in the bank, which makes them less likely to file small claims. Plus, they may be more likely to complete maintenance tasks that can reduce losses. Albanese says common deductible levels are $250, $500, $1,000, $2,500 and $5,000. In her experience, increasing the deductible at the lower levels can result in savings of 5 to 10 percent off the premium. As deductibles get higher, the savings may be as much as 15 percent or more.
5. Bundle your policies. Most insurers offer multi-policy discounts to consumers who purchase several policies from the carrier. Discounts vary but may range between 15 to 25 percent depending on the types of coverage being combined.
Bundling auto and homeowners insurance at a single company is a common way to get a multi-policy discount. However, reduced prices may be available for life, umbrella and other insurance purchases as well.
6. Install safety features. Insurance companies reward those who take steps to protect their homes against losses. Outfitting a home with smoke detectors and fire extinguishers is a simple way to get a discount. More advanced, and expensive, options include installing a back-up generator, water flow detection device or hurricane shutters.
Most companies will also provide a discount for home security systems, but that may not always be a cost-effective option. “There seems to be mixed sentiment in the [insurance] community,” Crowe says. “What you save in premiums may [be lost] by the cost of the security system.”
[Read: How Climate Change Will Impact Homeowners Insurance.]
7. Shop for lower-cost coverage. Changing insurance companies is another way to save money on premiums. Firms eager to attract new customers may be willing to offer lower rates. However, insurance experts caution against shopping for coverage based on price alone.
“It’s important to be sure the company is financially stable,” Albanese says. She says her firm looks for companies that have received at least an A rating from A.M. Best, an insurance rating agency. These ratings indicate the financial strength of the insurer.
Consumers may also want to read customer reviews before switching companies. These reviews can provide an indication of the quality of an insurer’s customer service and their approach to the claims process.
Saving money in 2018 doesn’t have to mean giving up a desired purchase. You could spend a few hours following up on these options and save money on your homeowners insurance instead.
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Lower Your Bill: How to Get Cheaper Homeowners Insurance originally appeared on usnews.com
