Buying a house is rarely cheap, and the spending never stops there: Water heaters, septic tanks, flooded basements and more can all ruin your day at a moment’s notice. Luckily, home insurance doesn’t have to be another drain on your hard-earned cash, because discounts are out there. And getting them could be as simple as a phone call.
Everything from a nearby duck pond to your roof’s material could qualify you for big savings on your premiums. Our independent insurance agents can help you find the discounts you deserve, lower your bills, and get you back to the good things in life. But first, let’s talk a little more about these discounts—so relax and put your feet up, this is gonna be fun.
When you insure your home, you're signing up to pay premiums (monthly, quarterly, or yearly payments that may be rolled into your mortgage) in exchange for coverage. If your home is damaged, your insurance company promises to pay as long as certain conditions are met.
Quite simply, home insurance discounts lower those premium payments. But insurance discounts don’t really work like the coupons you love. You don’t clip ‘em out of the Sunday paper and get free flood insurance with the purchase of two extra add-ons. They’re more like a giant computer algorithm that the insurance company uses to calculate how likely your home is to get into trouble. The less likely damage or vandalism is, the less you’ll pay.
Things that might go into the formula include your age, gender, location, marital status, credit score and driving record. Two things that never go into the formula are your race and religion, since those characteristics are protected by law when it comes to insurance.
Another factor in home insurance discounts is the size of your deductible. A deductible is an amount of money for damage that you agree to pay before your insurance coverage kicks in. The higher your deductible is, the lower your premiums will be, since the insurance company is on the hook for less money and they pass those savings on to you.
It’s important to remember that not all discounts will be spelled out in your policy, even if they’re still saving you money.
You’ll probably know if you’re getting a military or veterans discount, but you might not realize you’re getting a marriage discount, too. It’s all part of the great algorithm.
Insurance companies (also called carriers) don't like to share their exact formulas with customers. It's key to their bottom line, so they consider it proprietary information. Luckily, we've got insider knowledge. Here's what carriers are really thinking when they offer you savings on your homeowners insurance.
The cost of your home insurance is mostly based on two things: the chance of your home getting damaged, and the potential cost to the insurance company if that damage does happen. Insurance payouts aren't tied to how much you paid for your home, they're based on how much your home will cost to rebuild.
Unless you're a contractor, you might not even realize what goes into a home's replacement costs. It's everything from normal stuff like rooms, appliances, and bathrooms, to weirder stuff like the number of corners and recessed lighting fixtures your home has. Choosing a simple home that's cheap to build can discount your home insurance significantly.
The thing is, most people aren't going to shop for a home with nothing but insurance costs in mind. You want a home that looks nice, feels nice, and meets your needs. If that means having a whole mess of corners and recessed lights in every room, then so be it!
It pays to think about insurance costs before you buy a home, but it's probably never going to be a deciding factor. Luckily, there are other kinds of discounts you can score that aren't related to the replacement costs of your home.
There are nearly as many home insurance discounts out there as there are insurance companies, but they can all be divided into four major types. And here they are:
Each of those categories breaks down into a bunch of possible discounts you can qualify for. Here's a more exhaustive list of home insurance discounts:
Bonus round: high deductible discounts. If you agree to pay a higher deductible if you need to make a claim, your premiums will be lower. The insurance company will owe less, so they pass those savings on to you. Choosing a high deductible makes sense if you have enough savings on hand to cover minor home repairs on your own.
The short answer: It mostly depends on the replacement cost of your home. Rambling Victorian mansions are charming, but they cost more to insure due to their complicated designs and older materials. A newer house with no turrets and up-to-date safety features will have cheaper premiums.
The hardest part of getting home insurance discounts is understanding when you're getting a discount. Some carriers will advertise their discount programs, while others just quietly factor savings into the final deal.
This is especially true with home insurance, where each insurance quote is based on a ton of different risk factors. Insurance formulas are always changing to reflect new risks. At the same time, your house may be aging and changing, too.
It's easiest to get insurance discounts if your home is newly built or renovated, but it's not the only way to get discounts.
Even if your home sweet home is old or full of what real estate agents politely call "character," you're still in luck: bundling, group, and loyalty discounts don't depend on the safety or replacement value of your home, and they're among the easiest and simplest discounts to get.
Don't rule out renovation as a premium-busting option. Revamping a home can make it safer, slashing your insurance premiums while seriously raising its value. Sweat equity pays insurance dividends.
First, remember that you're probably already getting discounts based on stuff you don't have a lot of control over: your house's condition, location, and age. The savings might not be spelled out as discounts, but they're still discounts.
The next step is to do a little bargain hunting, both with an insurance agent and with your social network. Be sure to ask any major organization you're a part of if they offer discounts. That includes your union or other professional organization, bank, advocacy groups like AARP, and your place of worship, if you have one.
Remember, carriers can't take your religion into account, but your place of worship may organize discounts for its members, or encourage you to work with a certain company. For example, Thrivent Financial offers financial and insurance services primarily to Lutherans.
Working with independent insurance agents is another great way to get discounts. Independent agents aren't bound to one company's super-secret insurance formula. They can comparison shop between carriers and help you zero in on the best deal.
Here are the top factors that influence home insurance discounts:
Home insurance discounts rest almost entirely on details about your home, unlike car insurance discounts, where your personal habits matter just as much as the make and model of your car.
That's good news for you: You can kick back and enjoy while your agent pulls the permits, surveys and tax documents they need. An insurance adjuster may also visit your home to gather intel.
You can't slack off entirely, though. Start by listing any valuable possessions you have in your home, such as fine jewelry, fur coats, precious metals, or priceless art. Home insurance helps protect your belongings, so what you store in your home can affect your premiums.
(You may choose to add something called a "floater" to your home insurance coverage, which is designed specifically to cover valuable items.)
Plus, there are a few personal details that do affect what discounts a carrier might offer you. Here's what your agent needs to know to find you the best deal:
Once your insurance agent gets all the details about you and your property, they'll churn everything through the insurance formula. An independent agent will work with multiple companies so you can have a few different coverage options and rates to choose from.
Don't be shy about asking which discounts have already been applied to each quote and if there are more you could qualify for. Even if you're not eligible right now, it helps to know what you can expect down the line, too.
Planning to renovate? Don't forget to check in with your agent first. They'll have the inside scoop on things you can do to reduce home insurance costs, like picking out easy-to-replace materials or getting rid of fire risks.
Now you know how discounts work. But we all know your time is valuable, so why sweat all the hard work yourself? Our independent insurance agents stay on top of the industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage, at the right price, for you.
They’re not just there at the beginning, either. If disaster strikes and you need to file a claim, they’ll be with you every step of the way, helping you meet deadlines and maximize your benefits. Besides, you deserve a cheer squad.