11 ways to save money on homeowners insurance

By Julie Bawden-Davis

Your home is your refuge and you may even consider it your most important possession. While you don't want to scrimp on insurance for the roof over your head, there are simple steps you can take that don't change the quality of coverage but can leave a substantial amount of money in your savings account each month.

1. Improve your home's safety and security

Making sure you and your family are safe and secure can save you a lot of money. Insurance companies generally offer discounts of at least 5 percent for safety devices such as burglar alarms, smoke detectors, fire retardant and hail-resistant roofing materials, storm shutters and deadbolt locks. Sophisticated sprinkler systems and fire and burglary alarms that alert the police station or a monitoring facility can bring you even higher discounts. Some insurance carriers also give discounts for living in a gated community.

2. Consolidate your insurance

Buying your home, auto and liability policies from the same insurer can save you 5 percent to 15 percent in premiums. Some insurers also have financial services, such as checking and saving accounts and credit cards. The more financial products you have with your insurance carrier, the lower your overall costs.

3. Insure your dwelling, not the land

Save money by not including the value of your land in your homeowners insurance policy. Land is generally not at risk from fire, storm damage or other perils.

4. Become a long-term customer

Many insurers give discounts to clients who have stayed with them a specified time period. You could save 5 percent to 10 percent for your loyalty.

5. Increase your deductible

Although many insurance companies recommend a $500 deductible, raising it to $1,000 can lower your premium substantially--sometimes by as much as 25 percent. A higher deductible saves you more upfront, just as it does with health insurance. Keep in mind that if you live in an area likely to sustain damage from hurricanes, tornadoes or hailstorms, your policy may have a separate deductible for such damage or, in the case of earthquake and flooding, you will have to take out a separate policy.

6. Avoid filing small claims

Many insurers have "claims-free" discounts. While you certainly want to file claims when necessary, it may be in your best interest to avoid reporting minor damage. In many instances, such items are less expensive than the deductible, anyway.

7. Pay annually or semiannually

Paying premiums monthly generally costs 5 percent to 10 percent more because the insurer is required to do additional bookkeeping and paperwork. Pay annually or semiannually and you can reduce your bill, sometimes substantially.

8. Maintain good credit

Insurers are checking credit history more often nowadays and using the information they obtain to price insurance. Protect your credit standing by paying your bills on time and keeping your credit balances low. Also check your credit on a regular basis, and correct any errors immediately.

9. Review your policy yearly

On an annual basis, thoroughly review your homeowners insurance policy, checking and comparing important items such as the value of your property and possessions against your coverage. While you want your policy to cover important belongings, you don't want to pay for insurance you don't need. Many insurance carriers or agents will be glad to review your policy with you.

Also check your insurance's replacement coverage, which refers to the amount of money you will receive to rebuild your home and replace its contents. While policies that contain what is known as "actual cash value" limits may be less expensive because they only pay what your property is currently worth minus depreciation, such coverage may be too risky. Carefully consider how you would rebuild and replace your belongings using your current coverage, and restructure the insurance if necessary. Lower premiums are not worth being unable to rebuild in the event of fire or a similar loss.

10. Do your homework

Before purchasing a homeowners insurance policy, ask friends and family for referrals. If you find individuals who are happy with their carriers, inquire how the insurance companies respond to requests and how quickly they cover losses. Talk to several insurance carriers before making a decision, and check the financial stability of the companies you are considering with A.M. Best or Standard & Poor's. The National Association of Insurance Commissioners also offers information about various insurers in your state, including any complaints.

11. Get group coverage

Some business and alumni associations offer group homeowners insurance packages that provide discounts. Ask directors of the various groups you belong to about available insurance.