Property insurance protects homeowners against losses and damage to their home and possessions. Common policies include homeowners insurance, renters insurance, condo/co-op insurance, and mobile home insurance. These policies cover your dwelling, other structures like garages, and personal belongings against risks like fire, lightning, windstorms, hail, explosions, theft, and more.
Premiums, or the amount you pay for coverage each year, can be quite costly for property insurance. Some key reasons why rates are often high include:
- Rebuilding Costs – It’s expensive to rebuild a damaged home with labor and materials. Policies need high coverage limits, driving up premiums.
- Liability Coverage – Policies also cover personal liability if someone gets injured on your property. More coverage means higher premiums.
- Natural Disasters – Insurers face major losses from floods, hurricanes, tornadoes, etc. They pass these costs to consumers through premiums.
- Claims Frequency – The more claims filed in your area, the more risk insurers take on. More risk equals higher premium rates.
- Location – Homes in high-risk flood/fire zones or in cities with more crime pay higher premiums.
- Construction Materials – Homes not built with brick/cement that resist damage incur higher premiums.
- Inventory Coverage – The more possessions you insure, the more it costs to cover them.
While premiums can strain your budget, adequate property insurance is crucial protection. There are ways to get discounts and compare insurers to find the best value. But premiums will always reflect the underlying risks and costs.
When shopping for property insurance, don’t simply accept the first premium quoted to you – there are many ways you can reduce your rates and get more affordable coverage. One strategy is to opt for a higher deductible, which is the amount you pay out-of-pocket before insurance kicks in. Choosing a £2,000 deductible rather than a £500 deductible can shave 15% or more off your premium. Just be sure you have the savings to cover the larger deductible if needed.
Bundling your policies with one insurer is an easy way to score discounts of up to 15% off both your home and auto insurance. If you live in a flood zone, adding flood insurance to the bundle can maximize savings. Improving home security with alarm systems, surveillance cameras, fire extinguishers and lightning rods can also net you discounts by making your property less risky to insure.
Maintenance counts too – fixing loose railings, cracked sidewalks and any tripping hazards shows insurers you’re a responsible homeowner. They may knock 5% or more off your next renewal premium. Speaking of renewal, review your coverage every year and adjust limits or deductibles to avoid over-insuring. And be sure to take advantage of any discounts like multi-policy, claim-free, non-smoking and retired person.
10 Ways to Lower Premiums:
Raise your deductible
The deductible is the amount you agree to pay out-of-pocket towards a claim before the insurance company starts covering damages. A common deductible amount is £500 or £1000. However, you can usually choose a higher deductible like £2500 or even £5000.
Opting for a higher deductible essentially shifts more of the upfront cost burden onto you in the event of a claim. But in exchange, you get lower monthly or annual premiums.
For example, let’s say your premium with a £500 deductible is £1200 per year, or £100 per month. If you raise your deductible to £2000, your premium may drop to £900 per year, or £75 per month.
That’s an annual savings of £300 by agreeing to pay more in the case of an actual claim. Over several years, the premium savings really add up – especially if you don’t end up filing any claims.
The key is to choose a deductible amount that aligns with your financial means. If you can comfortably afford to pay £2000-£5000 towards repairs in the case of damage, then a higher deductible can be a smart money-saving strategy. Just be sure you have the savings or emergency funds to cover it if needed.
Bundle your policies
Many insurance companies offer a bundling discount if you purchase multiple insurance policies from them, such as home and auto insurance. The discount is typically around 10-15% off each policy when you bundle them together.
This incentive is offered because insuring both your home and vehicles with one company is seen as less risky and more convenient for the insurer. When policies are bundled, there is a better chance they will retain you as a lifelong customer across multiple product lines.
For example, let’s say you pay £1000 annually for auto insurance and £1200 annually for homeowners insurance when purchased from separate companies. If you bundle them with the same company, you may now pay £900 for auto and £1020 for homeowners, saving you £280 per year.
The more policies you can bundle, the higher your savings. Some insurers allow you to bundle in flood insurance, umbrella liability coverage, boat insurance, and more. Bundling works best if you already have multiple assets that need coverage, allowing you to consolidate for maximum discounts. Just be sure to compare bundled quotes, as bundling won’t always be the cheapest option when standalone policies are shopped around.
Improve home security
Insurers look at many factors when assessing the risk of insuring a home. Homes with more robust security features are considered lower risk, because things like alarm systems, security cameras, and motion sensor lights deter theft and vandalism.
By installing these types of home security upgrades, you make your home a less attractive target for burglars and intruders. Most insurers recognize this reduced risk by offering premium discounts for approved security systems. Typical discounts can range from 5% to 15% or even higher, depending on the extent of your installed features.
For example, simply adding visible security signage, exterior lights, and door locks may qualify you for a 5% discount. But installing a monitored alarm system connected to a central station could earn you a 15% or higher savings. The more features you add, the higher your discount may be. But be sure to check with your insurer first about qualifying security upgrades in your area.
Improving home security requires some upfront investment. But over the long run, the premium savings will likely outweigh the equipment costs. Lower risk also means fewer claims, which keeps your premiums affordable. That’s why upgrading security can pay dividends on your property insurance rates.
Seek discounts
Companies often offer discounts to policyholders who they believe represent lower risk. By giving these discounts, they are able to attract and retain low-risk customers. Some common ways to score discounts include:
Claim-Free Discount – If you have not filed any claims on your policy over a set number of years (usually 3-5 years), you may be eligible for a claim-free or no-claims discount. This provides a incentive for careful policyholders.
Non-Smoker Discount – Since non-smokers present lower fire risk, insurers will offer sizeable discounts of up to 10% for non-smoking households.
Retiree Discount – Retirees tend to be home more often and keep a close eye on their property. Less risk of damage when people are home means lower premiums.
Safety Feature Discounts – Discounts for features like alarm systems, fire extinguishers, lightning rods, and smoke detectors. They help prevent claims.
Bundle Discount – Bundling multiple policies with one insurer, like home and auto. Bundling is seen as lower risk.
The key is to inquire about any discounts you may be eligible for and provide proof to your insurer. The savings can really add up over time. Maintaining your low-risk status through responsible behavior pays off on your premiums.
Compare insurers for property insurance
Rates can vary widely between different insurance companies for the exact same coverage. This is because insurers assess risk differently, operate in different geographical markets, and have varying expense levels that influence their premium pricing.
The variation in rates between insurers for identical property insurance policies can be hundreds of dollars per year. This is why it is crucial to get quotes from several competitors rather than just going with the first insurer you come across.
Shopping around allows you to compare factors like the types of discounts offered, policy endorsements included, deductible options, and premium prices. You may find you can get far superior coverage at a lower price through an insurer you didn’t initially consider.
Getting quotes is easier than ever with insurer websites and online quote comparison platforms. Spending an hour or two to get 3-5 quotes can result in premium savings of 10% or more on the same home. Over several years, those savings really add up.
Don’t automatically assume your current insurer offers the best price. The market is constantly changing. Regularly comparing rates ensures you aren’t overpaying for your level of property protection. Maximizing savings depends on taking the time to be an informed, proactive consumer.
Maintain good credit
Many companies will look at your credit-based insurance score when determining your property insurance rates. This score is calculated using information from your credit report, and is different from your general credit score.
Insurers have found that individuals with lower credit-based insurance scores tend to file more claims. They pose greater risk to insurers, so companies will charge higher premiums to cover that increased projected risk and cost.
Your credit score plays such a big role that improving it just a few points could lower your insurance costs by hundreds of dollars per year. Actions like paying bills on time, paying down debts, avoiding too many credit inquiries, and fixing errors help raise your score.
Keeping your overall credit history clean shows financial responsibility and positively impacts your insurance score. Check your credit reports annually for accuracy. Clear up any unpaid collections and resolve disputes on your record.
While you can’t completely avoid premium variances based on your score, maintaining the highest score possible will ensure you are getting the lowest insurance rates. Monitoring and building your credit is well worth the savings.
Seek group discounts
Many colleges, universities, fraternities, sororities, and professional organizations offer special deals on insurance products for their alumni members. These group discount programs leverage the collective buying power of alumni to negotiate preferred pricing from insurance carriers.
As an alumni member, you can access these group rates and save 10-15% or more compared to the general public insurance rates. The discounts are possible because alumni groups represent large, stable pools of customers for insurers. It gives the insurance companies expanded business while offering members a nice discount.
For example, a major university’s alumni association may partner with an insurance company to offer all active dues-paying members discounted home and auto insurance rates. By going through this group program, alumni could save hundreds per year.
The alumni organization has done the legwork of identifying competitive pricing on bundled insurance policies. All alumni members have to do is provide proof of active membership to access the low group rates.
Checking for an alumni insurance program is a simple way to potentially lower your property insurance costs. Just confirm the group rates beat your current pricing. Partnering with alumni associations allows insurers to pass some savings directly to members.
Purchase wisely
Homeowners insurance policies contain standard coverages, but you can add on supplemental riders for additional premium costs. Riders provide coverage for extra liabilities and risks not in a basic policy.
For example, an earthquake rider would provide added coverage in the event your home is damaged by an earthquake. A jewelry rider would insure expensive jewelry that exceeds normal theft coverage limits.
While these riders provide extra protection, they can cost hundreds of extra dollars per year. Purchasing riders you don’t absolutely need can excessively inflate your premiums.
That’s why it’s smart to avoid rider policies unless they are truly essential given your unique risks and assets. Instead of automatically adding every rider, analyze if the likelihood of that event is high enough to warrant the cost.
For instance, unless you live in a major earthquake zone, that rider may not be necessary. And you can list individual expensive jewelry items rather than buy a rider to cover all jewelry. Focus on your biggest risks.
As with all insurance, weigh the premium against the potential benefit to find the right balance of coverage affordability. Only pay for riders that are truly warranted and essential to properly insure your most important assets at the best value.
Review coverage annually
The amount and type of property insurance you need can change year to year as your home value, assets, and life situation change. If you simply renew the same policy automatically, you may end up over-insured.
For example, you may have insured expensive jewelry five years ago that you no longer own. Or perhaps you finished renovating your kitchen and need to adjust coverage limits. If you don’t review annually, you could be paying for more coverage than you actually need.
Sit down each policy renewal to re-evaluate your current property and possessions. Adjust coverage limits up or down based on market value. Remove coverage for items you no longer have. And think about risks – a new roof may reduce the need for leakage protection.
Being over-insured wastes money on premiums for unused coverage. The goal is to secure enough protection for your most valuable assets and highest risks. But excessive coverage does not benefit you beyond a certain point.
Checking in each year and making adjustments ensures you have the right insurance tailored to your property’s current value and vulnerabilities. As your home and life evolve, your coverage should properly align and not just roll over out of habit.
Make small claims yourself
Property insurance is meant to protect you financially from major damage or loss to your home and possessions. But for minor issues like a broken window or appliance repair, it may not make sense to file a claim.
Insurance claims, even small ones, can cause your premiums to increase upon renewal. That’s because claims indicate higher risk and future costs to the insurer. For a small £500 repair, you might see your annual premium rise by £50 or more.
In such cases, consider paying these petty repair bills yourself rather than filing a claim and risking a premium hike. The increase could end up costing you much more over time than just covering the one-time cost.
However, don’t try to take on too much yourself. If damage exceeds several thousand dollars, the claim is likely worthwhile to avoid large out-of-pocket repairs. But analyze each incident to see if it’s in your best interest long-term to file or not.
Keeping claims to a minimum maintains your good standing with the insurance company. You want to file claims only when truly needed for major expenses. Carefully weighing filing options can help control rising premium costs.
Bottom line
Property insurance can be quite expensive, especially for homeowners with high-value houses and possessions. But there are many ways a smart, deal-seeking consumer can reduce their insurance premiums.
Doing research to understand policy options, utilizing discounts, comparing multiple insurer rates, optimizing deductibles, and reviewing coverage annually allows you to customize an optimal policy. Putting in time upfront to make informed insurance decisions saves hundreds of dollars each year.
A savvy consumer looks for insider tips like bundling policies, improving home security for discounts, maintaining good credit, and negotiating rates whenever possible. Knowledge is power when it comes to reducing insurance costs.
Additionally, smart consumers realize the long-term benefits of responsible behavior. Filing claims judiciously, avoiding risky activities in your home, and maintaining your property demonstrate good standing with insurers.
Being engaged, informed, and proactive are the keys to scoring significant savings on property insurance premiums year after year. A passive approach usually results in overpayment. But a smart customer has the tools to unlock substantial reductions.
The home insurance marketplace rewards those invested in making the right choices for their situation. A focus on value, not just price, leads savvy consumers to their best property insurance options.
We’ve covered numerous techniques to get lower premiums – from raising deductibles to improving home security to bundling policies. With property insurance costs consistently rising, it pays to be proactive and work these savings strategies to your advantage.
I recommend sitting down with your current policy to see where some of these suggestions can be implemented now before your next renewal. Could you switch to a higher deductible to lower your rate? Are there new discounts you qualify for but haven’t utilized yet? Even just comparing quotes from other insurers may reveal you’re overpaying.
Look at both the short and long-term benefits of putting these strategies into action. The small effort required leads to hundreds, even thousands, in savings over time. I understand change can feel daunting, but you owe it to yourself to explore options and get the best coverage value.
Don’t let analysis paralysis stop you from taking steps towards savings – start with one tip that seems feasible. Whether reviewing your coverage limits or inquiring about bundling discounts, small positive changes add up. And I’m always here to help explain concepts or insurance lingo that may seem confusing at first.
The insurance market is designed to reward proactive customers who invest time into managing their policy wisely. Be one of those customers who capitalizes on insider tips to maximize value. Don’t overpay simply out of habit or procrastination. You have the power to take control and see your hard-earned dollars go further.
