How to Save on Homeowners Insurance: 15 Ways to Lower Your Premium

Homeowners insurance averages $1,500-$2,500 annually—more in high-risk states. That's significant money, and most people are overpaying.

Here's how to cut your premium without cutting coverage.

How Home Insurance Premiums Are Calculated

Insurers price based on:

Property factors:

• Replacement cost (not market value)
• Age and construction type
• Roof condition and material
• Location and local risks
• Claims history on the property

Personal factors:

• Your claims history
• Credit score (in most states)
• Coverage amounts chosen
• Deductible level

Risk factors:

• Fire station distance
• Weather patterns
• Crime rates
• Brush/wildfire exposure
• Flood zone status

Understanding what drives your premium helps you find savings.

15 Ways to Lower Your Premium

1. Shop Around Annually

The easiest way to save: get quotes from multiple insurers.

Why it works:

• Insurers price risk differently
• Your profile may be preferred by certain companies
• Rates change annually
• Loyalty isn't rewarded (usually penalized)

How to do it:

• Quote from 5-7 insurers
• Include major carriers (State Farm, Allstate, etc.)
• Check regional companies
• Try independent agents (access multiple carriers)

Expected savings: 20-40% by switching to a lower-cost insurer

2. Bundle Your Policies

Most insurers offer multi-policy discounts.

Common bundles:

• Home + Auto: 10-25% discount
• Home + Auto + Umbrella: 15-30% discount
• Multiple properties: Additional discounts

Caveat: Sometimes unbundling saves more. Always quote both ways.

3. Raise Your Deductible

Higher deductible = lower premium.

Typical impact:

The math:

• $2,500 deductible vs $1,000 deductible
• Saves $400/year in premium
• You'd need to file a claim every 3.75 years to break even
• Most people file less often than that

Recommendation: Set deductible at the highest amount you could comfortably pay out-of-pocket.

4. Improve Your Credit Score

In most states, better credit = lower premiums.

Why insurers use credit:

• Statistical correlation with claims frequency
• Controversial but legal in most states

How much it matters:

• Excellent credit: Best rates
• Poor credit: 50-100%+ higher premiums

Action: Work on your credit score generally—it affects insurance, mortgages, and more.

5. Avoid Small Claims

Filing claims raises your premium. Sometimes it's cheaper to pay out-of-pocket.

Rule of thumb: Don't file claims under $2,000-$3,000. The premium increase over 3-5 years will exceed the payout.

Example:

• $1,500 water damage claim
• Premium increases $300/year for 5 years
• Total cost: $1,500 claim - $1,500 premium increase = broke even
• But you also have the claim on your record

Better approach: Save small claims for catastrophic situations.

6. Upgrade Your Roof

Roof condition is a major premium factor.

Impact-resistant shingles:

• Meet UL 2218 Class 4 standards
• Resist hail damage
• Premium discount: 10-25% in hail-prone areas

New roof benefits:

• Modern materials rated higher
• Less likely to be dropped by insurer
• Some insurers won't cover roofs 20+ years old

7. Install Security Systems

Alarm systems and monitoring reduce burglary risk.

Typical discounts:

Combined security features can save 15-20%.

8. Add Storm Protection

In hurricane/wind-prone areas:

Mitigation options:

• Storm shutters
• Impact-resistant windows
• Reinforced garage doors
• Roof straps/clips

Florida example: Wind mitigation inspections can reduce premiums by 20-50%.

9. Maintain Your Home

Deferred maintenance increases risk—and premiums.

Keep up with:

• Roof repairs
• Electrical updates
• Plumbing maintenance
• Tree trimming
• Foundation issues

Insurers may inspect or require photos. Well-maintained homes get better rates.

10. Eliminate Hazards

Some features are insurance nightmares:

Premium increasers:

• Trampolines: $50-100/year increase
• Certain dog breeds: $100-300/year or excluded
• Pools: $50-100/year increase
• Wood stoves: Premium increase or exclusion

Decide if the feature is worth the insurance cost.

11. Ask About Discounts

Insurers have discounts they don't always advertise.

Ask about:

• New home discount (under 10 years old)
• Retiree/senior discount
• Non-smoker discount
• Claims-free discount
• Professional association discounts
• Alumni association discounts
• Loyalty discount (if staying)
• Payment discounts (annual vs monthly, autopay)

12. Review Coverage Annually

Common over-insurance:

• Insuring land value (not covered anyway)
• Excessive personal property limits
• Unnecessary riders

Common under-insurance:

• Replacement cost hasn't kept up with construction costs
• Valuable items exceeding standard limits

Match your coverage to your actual situation.

13. Consider Actual Cash Value vs. Replacement Cost

Replacement cost: Pays to replace items at current prices Actual cash value: Pays depreciated value

Replacement cost costs more but pays more. For most homeowners, it's worth it. But for older items you wouldn't replace, ACV may be enough.

14. Drop Coverage You Don't Need

Potential cuts:

• Personal property coverage (if you have few valuables)
• Scheduled items you no longer own
• Riders for risks you've eliminated

Never cut:

• Liability coverage (keep at least $300K)
• Dwelling coverage (replacement cost)

15. Look Into State Programs

Some states have programs for hard-to-insure properties:

• Florida Citizens (wind)
• California FAIR Plan (fire)
• Beach/Windstorm plans in coastal states

These are often last-resort options, but they exist.

How Much Should You Be Paying?

National Averages

• National average: $1,516/year
• Range: $500-$5,000+ depending on location and home

By State (Annual Average)

Most expensive:

• Oklahoma: $4,500+
• Nebraska: $4,000+
• Kansas: $3,800+
• Texas: $3,500+

Least expensive:

• Hawaii: $500
• Vermont: $700
• Utah: $800
• Oregon: $900

What's "Normal" For Your Home

Quick estimate:

• $0.35-$0.50 per $100 of coverage in low-risk areas
• $0.50-$1.00+ per $100 in high-risk areas

$300,000 coverage:

• Low-risk: $1,050-$1,500/year
• High-risk: $1,500-$3,000+/year

When to Accept Higher Premiums

Not every saving is worth it.

Keep Full Coverage If:

• Your mortgage requires it
• You couldn't self-insure the deductible
• You're in a high-risk area
• Your home is your primary asset

Accept Premium Increases For:

• Features you truly value (pool, dog, trampoline)
• Adequate liability protection
• Proper replacement cost coverage

The Annual Insurance Audit

Every year:

1. Review your coverage amounts
2. Check that personal property coverage is accurate
3. Verify dwelling replacement cost
4. Get 3-5 competitive quotes
5. Ask your current insurer to match
6. Switch if the savings justify it

Time investment: 2-3 hours Typical savings: $200-$800/year

The Bottom Line

Most homeowners can save 10-30% on insurance without reducing meaningful coverage.

Quick wins:

1. Shop annually (biggest impact)
2. Bundle policies
3. Raise deductible to $2,500+
4. Install security/safety features
5. Ask about all available discounts

Longer-term:

• Improve credit score
• Upgrade roof when due
• Maintain property well
• Avoid small claims

Insurance is a competitive market. Use that to your advantage.

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Understanding your home's value affects more than insurance. Calculate your equity and HELOC options →