6 Strategies 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.

These events triggered a huge influx of home insurance claims, and analysts expect the increase in both catastrophes and claims to continue. In addition, 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. 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. For most homeowners, comprehensive home insurance coverage is crucial for financial security, but rate increases can definitely affect the bottom line. A home insurance policy is required by lenders to get a mortgage, and, in some hard-hit regions of California we’re seeing sales fall through or homes sit on the market because insurance policies other than the California Fair Plan are unattainable or too expensive. 

But don’t panic! Keep in mind that California has some of the lowest rates in the country when comparing property value to insurance rates. While the broader insurance rate trends may be out of your control, there’s still plenty you can do to save. Here are our top six strategies to reduce insurance premiums while maintaining the protection you need.

1. SHOP AROUND

Getting multiple quotes is always a smart move for many major purchase, including home insurance. We recommend reviewing at least three estimates before you commit to a policy. You can get quotes either by reaching out to insurers directly or by working with an independent insurance broker who has access to policies from a number of different carrriers. You’ll need to provide detailed information about the property you’re insuring as well as your personal claims history. Insurers are looking to set accurate pricing based on the probability of having to pay out on a claim, so they are looking at both you, and the property you are purchasing.

Make sure you read policies carefully before you choose. Sometimes, a policy can look like a better deal at first glance but turn out to have important coverage gaps. Be sure to consider how much the policy will pay out to repair or rebuild your home, and review coverage caps on personal property and liability claims. You may need to add additional coverage for high ticket property like jewelry and artwork. And, if you own a business, you may want to consider an umbrella policy to make sure your home is protected against liability. It’s also smart to read reviews from policyholders (Trustpilot is a good place to start) and ratings published by organizations like the Better Business Bureau and J.D. Power. The State of California Department of Insurance is also a great resource for information about different insurance carriers, including complaints.

If you need help finding the right policy, contact me for a list of trusted insurance professionals.

2. INCREASE YOUR DEDUCTIBLE

The size of your deductible, which is the amount you pay before your insurance coverage kicks in on a claim, is a major factor in your insurance cost. A low deductible comes with higher premiums, while a higher deductible costs less on a monthly basis. In some cases, you may be able to customize your coverage further by designating a different deductible for certain kinds of claims, such as those caused by natural disasters. If you are confident that you have enough in savings to cover the initial deductible outlay if needed, choosing a higher deductible can help you save significantly over the long term. According to Nerdwallet, raising your deductible from $1,000 to $2,500 could save you an average of 11% each year.

3. BUNDLE MULTIPLE TYPES OF INSURANCE

Insurers want to get as much of your business as possible, so most offer significant discounts if you bundle your home and auto coverages. Some insurers offer even higher savings by bundling other coverage for RV, boat, jewelry, and life insurance. According to US News and World Report, insurers typically offer customers who bundle home and auto insurance 10-25% savings on monthly premiums. This approach also has other advantages: It cuts down on your paperwork, and in some cases, like if a storm damages both your home and car, you may be able to pay just one deductible instead of two when you file a claim. However, before you sign on the dotted line, remember strategy #1 and be sure to shop around. Bundling isn’t always the cheaper option, and bundling deals vary between companies. It’s also critical to carefully check that the bundled coverage offers everything you need.

4. ASK ABOUT AVAILABLE DISCOUNTS

Did you know that being a nonsmoker might qualify you for a home insurance discount? Some insurers offer some surprising incentives for policyholders who pose a statistically lower risk of filing a claim. In the case of nonsmokers, that’s because of the decreased risk of a home fire. Many carriers also offer discounts to military families, homeowners in certain professions, such as teachers or engineers, or new homebuyers. Sometimes, you can also save by opting for paperless billing or paying your annual premiums in advance. Since available discounts vary significantly between insurers, ask the insurance agent for the full list of available discounts, so you can see what cost savings might be available to you.

5. AVOID MAKING SMALL CLAIMS

Try to avoid making a claim unless truly necessary. Many insurers offer discounted rates to policyholders who go a certain number of years without filing a claim, and filing multiple claims typically results in large increases. If you file too many, you may even risk nonrenewal of your policy. The cost of even a small premium increase can add up over time; so, if you have minor damage to your home, like a few shingles blowing off your roof in a windstorm, it may be a wiser long-term financial decision to pay out of pocket, instead of filing a claim. If the cost of the repair is either less than, or even slightly more than your deductible, it's best to pay for the repairs yourself. Additionally, always be sure to review your policy before you make a claim. Even claims that are denied can count against you, so it’s not worth filing if the damage is clearly excluded from coverage. If you find yourself in this situation, feel free to contact me for a list of reasonably-priced professionals who can help with home repairs.

6. BE STRATEGIC ABOUT HOME IMPROVEMENTS

Insurance premiums alone may not be the deciding factor for a home improvement project, but it’s important to know how renovations could impact your rates, for better or worse.

Some upgrades and repairs can reduce your premiums by making your home safer or less prone to certain types of damage. These include:

• 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:

• 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.

BOTTOMLINE: Protect Your Investment Without Sacrificing Enjoyment of Your Home

Getting the coverage you need for financial security without overpaying can be a tricky balance, especially in today’s environment. Remember, while it’s important to find the best deal you can, home insurance isn’t an area to skimp on.

For advice on your specific risks and the type of coverage you need, we recommend consulting with a knowledgeable insurance professional. I'm happy to connect you with a trusted adviser in our network. And if you’re considering a home renovation, feel free to contact me for a free consultation on how it might affect your property value and your premiums.

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, insurance, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.