In the United States, the average price for a median home is estimated to be $200,000. Insurance.com projects the cost of insurance for such a home to be about $1,228. But what makes home insurance this expensive?
It’s generally hard to pinpoint a specific factor since it can be anything ranging from high-risk location to poor house condition. For example, expect to pay higher premiums if you stay in an unsafe or disaster-prone neighborhood. Similarly, expect to pay much more if your home is old and worn out.
Additionally, you may incur higher premium costs if your credit score is poor. So, how do you keep the cost low? Lange High Net worth Insurance recommends the following:
- Increase Your Deductibles
A deductible refers to the money you take out of your pocket to pay for a loss as you wait for your home insurance to act. Usually, paying higher deductibles translates to reduced premiums. If, for example, you increase your deductibles from $500 to about $1,000, you are likely to save up to 25% on your insurance premiums. However, you should talk to your agent first to find a comfortable deductible limit.
- Hunt for Discounts
There are so many ways to score discounts on home insurance. You just have to find what suits you. Popular options include:
- Claim an age discount if you are a senior citizen
- Take advantage of the free-claim discount if you haven’t filed a claim for 10 years or more
- Move to a gated community to enjoy a gated community premium discount
- Bundle up your insurance policies (life insurance, auto insurance, home insurance, etc.)
- Join a Homeowners’ Association (HOA) to enjoy an HOA discount
- Quit smoking to start enjoying the nonsmokers discount
- Enhance Your Home Security
Home insurance companies look at home security risks when quoting premiums. If the risks are fewer, expect to pay lower premiums. So, you should find ways to enhance your home security if it’s costing your higher premiums. You can do the following:
- Invest in a burglar alarm or surveillance system
- Fit tamper-proof locks on the windows, doors, and gate
- Ensure your home is not left uninhabited for too long
- Cut down nearby trees to eliminate the risk of them falling on your house
- Fortify Your Home Against Disasters
If your home is located in an area prone to disasters like flooding, fire, and earthquakes, you don’t have to move. It’s generally costlier to buy a new home than to reinforce an existing one. Here are some tips you could use to fortify it:
- Install smoke detectors to sense fire threats
- Fit the right flood openings to reduce the risk of flood damage
- Elevate the floor level to resists flooding
- Reinforce your roof and walls to resist earthquake damage
- Install water barriers to resists hurricane damage
- Build Your Credit Score
As mentioned earlier, a poor credit score can raise your premiums. Normally, home insurance companies look at the score to predict your likelihood of filing a claim. To them, having an impressive credit score means a lower chance of filing an insurance claim. Therefore, you should try to build your credit score if it’s less impressive. One way to do it is by paying all your debts.
- Do Necessary Renovations
Not all renovations can reduce your insurance premiums. For example, adding an extra room into your existing home could raise your premiums instead of lowering it. However, changing the roof and updating the plumbing or the wiring could reduce your premiums by almost 25%. You just have to figure out which renovations are cost-effective in the long run and which ones are not.
- Dismiss Land Coverage
Lastly, you should check with your home insurance agent to confirm if the piece of land that your home sits on is covered by your home insurance policy. If it is, then you should consider excluding it. Doing so will significantly reduce the cost of your premiums. You can include a feature like a swimming pool, but you don’t have to cover the land when there’s nothing on it.
Though home insurance is traditionally costly, there are ways to keep the premiums low. It all starts with identifying the factors that affect the price. The above approaches will get you started, and you can count on them to save you from paying expensive premiums.