If you’re struggling to cover the cost of homeowners insurance, along with your mortgage and other expenses, you might be thinking about modifying your coverage to lower your premiums. That can be a smart move in some cases, but making the wrong changes can put you in financial jeopardy.
Review Your Coverage and Figure Out If It Suits Your Needs
Read over your homeowners insurance policy. Look at the types of coverage you have, as well as your limits, and ask yourself if your current policy makes sense for you.
You might be paying for unnecessary coverage. For example, you might have more personal property coverage than you need, or you might be paying for a rider that covers a valuable item that isn’t worth as much as it used to be.
Dwelling coverage is another area where homeowners sometimes overpay. Your coverage limit should reflect how much it will cost to rebuild your house if it gets destroyed by a covered peril. You should not select your coverage amount based on your home’s current market value or how much you paid for it because those numbers account for the value of both the house and the land.
Consider Raising Your Deductible
Choosing a higher deductible might allow you to significantly reduce your premiums. Before you do, review your current policy. You might have separate deductibles for different types of claims. In some cases, your deductible might be several thousand dollars. Make sure that you’ll be able to afford to pay the relevant deductible out of your own pocket if you have to file a claim.
Ask About Discounts
Insurance companies offer a long list of discounts that can save customers money. You might qualify for lower rates based on your employer or an affiliation with a university, professional group, or nonprofit organization. Retirees and other groups can also be eligible for lower premiums.
Each insurance company decides which types of discounts to offer and determines how much those discounts reduce customers’ premiums. You’ll have to contact individual companies to find out what type of savings are available to you.
Get Quotes From Several Insurers
Your current homeowners insurance company might not offer you the best rates. It pays to shop around and compare quotes from a handful of insurers. You might be able to switch companies and save money without having to change the types or amounts of coverage you have.
Consider Bundling Your Insurance Coverage
Bundling policies can be an easy way to reduce your premiums. If you currently have your homeowners and auto insurance though different insurers, purchasing both policies from the same company might save you a significant amount of money.
When you request quotes from different insurers, ask what your rates would be if you bundled two or more policies. Compare the total cost of coverage and figure out which company can give you the best deal.
