A homeowners insurance policy is an additional but necessary expense. It protects a homeowner’s property and possessions from unexpected events, such as natural disasters and accidents. Approximately 85% of Americans have made the smart decision of buying homeowners insurance, however, not all of them realize that they could be paying much less.
In this article, we’ll explore how you can save on your homeowners insurance by reducing your premiums.
What is homeowners insurance?
A homeowners insurance policy covers losses and damage to a homeowner’s residential structure (a.k.a home) and belongings, as well as provides liability protection in event of injuries. It’s worth mentioning that homeowners insurance covers dwellings that are occupied by the owner, hence, it typically does not cover investment properties. A landlord would need landlord insurance if they’re renting out their property for an indefinite period.
If you’re planning on turning your home into a short-term rental (e.g. for a few weeks while you’re out of town), your homeowners insurance policy may be enough. This, however, applies to infrequent short-term rentals. Your homeowners insurance won’t be enough if you plan on regularly renting out your property to multiple tenants over a short period.
To be certain, contact your insurer to understand what your insurance policy covers. You may also consider hiring a property manager to help you navigate the ins and outs of short-term renting.
Why do you need homeowners insurance?
Homeowners insurance protects your property from perils. It goes beyond protecting the physical structure of the home by protecting your personal possessions, as well. This includes everything you own, including your furniture, appliances, electronics, and much more. Depending on your insurer, your homeowners insurance policy may cover the following:
#1 Dwelling Coverage
This includes your home as well as any attached structures, such as sheds, patios, and garages. If a covered peril (e.g. fires and floods) damages these structures, your dwelling coverage will be able to offset the costs for repairs.
#2 Personal Property Coverage
In the event that your personal possessions (e.g. electronics and appliances) are stolen or damaged by a covered peril, your personal property coverage will be able to replace or repair these items.
#3 Personal Liability Coverage
If anyone in your household is found responsible for injuring someone or damaging a neighbor’s property, liability coverage will be able to cover the costs for repairs, medical bills, and legal fees. Keep in mind that this does not apply when the injury or damage was intentionally done.
#4 Guest Medical Protection
Similar to personal liability coverage, guest medical protection covers the medical bills that you would otherwise have to pay should a guest be accidentally injured in your home.
How much does homeowners insurance cost?
According to Bankrate, the average cost of homeowners insurance is $1,312 or approximately $109 per month. However, prices can reach $3,000 per month depending on where your property is located.
Homeowners insurance can be a costly expense, however, it is a worthwhile investment. Fortunately, there are ways to save money on your homeowners insurance. Let’s take a look at some of them:
#1 Raise Your Deductible
Standard homeowners insurance policies have an insurance deductible of $500 to $1,000. This is the amount you must pay out-of-pocket whenever you make a claim. In general, the higher your deductible, the lower your premiums. So, if you have can afford the higher deductible, raising it is one way to reduce your premiums. Just be sure that you actually have savings to pay for it.
#2 Don’t File Claims Frequently
If your insurance company discovers that you’ve filed a lot of claims, they will raise your premium rates. Frequently filing claims indicates that you’re likely to continue filing claims in the future. If possible, skip filing claims especially when it comes to minor incidents. For example, if you file a claim for $2,000 but you have a $1,000 deductible, your homeowners insurance will cover the $1,000. However, it will be on record that you filed a claim. It may be better to pay for the repairs out of your pocket instead of filing a claim.
#3 Secure Your Home
The more fire-proof, burglar-proof, etc. your home is, the lower your premiums will be. If your home is considered “safer” than average, you can save as much as 15% to 20% on your homeowners insurance. This is because insurance companies will consider your home less risky. So, install smoke detectors, deadbolt locks, and security cameras!
#4 Investigate Home Improvement Discounts
Home improvements such as upgrading roof insulation and installing storm shutters make your home more damage-resistant. To the eyes of your insurer, this makes you a less risky insuree. Schedule an inspection of your home to determine the home improvements that can be counted as discounts. If you’ve hired a property management company, their manager can conduct the walk-through for you.
#5 Make Your Home Less “Dangerous”
You may think that your short-term renter likes swimming pools and trampolines, but these “fun” activities can increase your homeowners insurance premiums. This is because insurance companies deem them as an “attractive nuisance”. It includes everything in the property that may be the cause of someone’s injury or death.
#6 Improve Your Credit Score
Insurance companies usually determine your premiums based on your credit score. If your credit score is too low (e.g. below 670), they may charge you higher rates. Similarly, if you maintain a high credit score (e.g. above 740), you may benefit from reduced rates. To improve your credit score, be sure to pay your bills on time.
And lastly, don’t forget to compare prices. Consider all of your options before deciding on a homeowners insurance policy. Start by speaking to a professional property manager who can determine the exact coverage your property needs. A property management company like Luxury Property Care can connect you to Florida’s top-rated insurers at competitive rates.