How to Get the Maximum Discount on Home Insurance

The national average homeowners insurance cost is now $2,377 per year according to the National Association of Realtors. And due to the increased costs of building materials and labor combined with increasing severe storm losses, the cost of home insurance is still rising. The good news? You can maximize discounts as a strategy to lowering your home insurance costs and save money without compromising your coverage.

Getting Started

Whether you’re securing home insurance for the first time or looking to renew or change policies, start by conducting research, brushing up on common coverages, documenting your specific insurance needs and mapping a plan for comparing quotes. Be prepared to read about what’s included in coverage, and never skip past a policy’s terms and conditions. Sorting through home insurance fine print can be a daunting task, but a licensed insurance agent can help you make sense of any fees and charges to coverage exclusions and limitations.

Comparing quotes: The first step to savings

• Decide where to shop and prepare to get three quotes. Many people prefer to use agents from insurance companies like AAA or independent insurance brokers. You can also get quotes directly from a company’s website—AAA.com, for example.
• Gather your information. For almost any homeowners insurance quote, you’ll need a couple of key pieces of information:
  • Square footage
  • Any claims filed in the past five years
  • The age of your roof and the materials it’s made of
  • The year your house was built, the year electrical and plumbing systems were updated and the type of heating system within the home
  • The types of safety features you have (e.g., burglar alarm, smoke alarm)
  • The number of people living in your home, how long you’ve lived there and the date you’d like coverage to begin
• Understand coverages. Standard home policies generally include four types of coverage:
  • Dwelling – covers damage to the home and other standalone structures on your property, including fences and sheds
  • Personal Property – pays to repair or replace stolen or damaged belongings
  • Loss of Use – helps pay temporary living expenses while your home is being repaired
  • Personality Liability – pays if you injure someone or cause property damage unintentionally or through neglect

You can learn more about these coverages here or by speaking to a licensed insurance agent.

Know what to look for beyond the price. Everyone wants the lowest cost home insurance, but if customer service and claims-process ratings are poor, or if you’re forced to give up some level of coverage for a discount, you may not be getting the best value for your money. 

Understanding types of home insurance discounts

• Multi-policy discounts are typically some of the largest discounts offered by insurance companies and can be one of the easiest ways to get cheaper home insurance. Essentially, they’re discounts offered to people who buy multiple policies from the same company (e.g., home and auto). While bundling is convenient, it doesn’t always result in cheaper premiums. Carefully compare bundled savings versus separate policies. 
• New home discounts are offered by some carriers specifically for “new homes.” Though insurers define “new homes” in different ways, many consider a home “new” if it was built within the past 10 years. The reasoning behind this discount is that newer homes are up-to-code and less likely to experience many of the types of damage more common in older homes.
• Security system discounts and safety system discounts are frequently available for homeowners policies but can vary by provider. Since your insurer has a vested interest in protecting your home, ask about discounts for things like burglar and fire alarm systems, smoke and carbon monoxide detectors, gas leak detectors, deadbolts on exterior doors, and sprinkler systems. Some insurance companies even partner with certain smart device companies to offer additional incentives and free devices.
• Electronic billing discounts are usually small but often available to people who sign up for electronic monthly billing statements. Some companies may refer to this discount as “paperless billing.”
• Pay-in-full discounts are commonly offered to homeowners who pay up front for a full year of home insurance instead of paying premiums in installments.

Shop around and make sure that a company offering you a discount has good ratings for claims handling and customer service, and that you’re not sacrificing coverage for a few dollars in savings.

Strategies to maximize your home insurance discounts

• Regularly review and update your policies. Periodic reviews of your home insurance policy are like a health checkup for your home. The review not only provides an opportunity to check for gaps in coverage, but it also allows you to inquire about new discounts. Some things to consider:
  • Does the policy now include a separate deductible for risks like hurricane or hail?
  • Should I raise the deductible to save money?
  • Do I need a flood, earthquake or umbrella policy?
  • Do I need to raise the amount of coverage for liability, personal possessions or the structure?
• Improve home safety. Part of your strategy for maximizing home insurance discounts should include the addition of safety and security features such as burglar and smoke alarms, sprinkler systems, carbon monoxide detectors, deadbolts on exterior doors and even upgrades to heating, plumbing and electrical systems. Even if discounts aren’t available for some safety improvements, it’s helpful for your insurance agent to document these changes and additions on your new or existing policy.
• Maintain a good credit score. With the exception of Maryland, Massachusetts and California, insurers in most states use your credit history to generate a credit-based insurance score, which can be used to set a higher or lower home insurance premium.

Doubling down on home insurance discounts: Start now

It’s no easy task to research insurance coverages, shop around and cross-compare policies, so it’s not surprising that many homeowners forgo the process. But to truly maximize discounts on home insurance, a plan and strategy are needed. Start small by making it a habit to review your homeowners policy regularly. Set time aside, in the same way you would for an appointment, to work through the steps of getting quotes and comparing coverages.

Remember, cost savings without adequate coverage could come at a steep price later down the road. Make sure that any discounts you receive are without compromise to the protection of your home. Start exploring your home insurance discounts and savings options today.