Trim Your Home-Insurance Premiums

Raising your deductible can help you in multiple ways.

The higher your deductible -- the amount you agree to pay out-of-pocket before the insurer begins to pay for a loss -- the lower your premium and the less likely you will file small claims that could lead to a rate hike or even cancellation. If you raise your deductible from, say, $500 to $1,000, you can cut your bill by as much as 25%, according to the Insurance Information Institute.

Many insurers now impose a percentage deductible rather than a dollar-value deductible. Sometimes the deductible depends on the peril -- a common example is 2% of the home’s insured value for hurricane-related losses, or the first $2,000 on a $100,000 policy. If your insurer gives you a choice of a percentage or dollar-value deductible, make sure that you understand what the percentage applies to before you accept the percentage version. (Percentage of dwelling limit? Dwelling limit plus the value of contents? Damage as defined by my contractor or by the insurance adjuster?)

Ask about any discounts for which you might be eligible -- such as reductions for an alarm or sprinkler system, fire extinguishers, or an impact-resistant or noncombustible roof. You might also get lower rates if you’re a senior, your home is updated and in good repair with no unsafe conditions, or you live in a retirement or gated community. Those discounts could trim your premium by 5% to 10% each. You might save 10% to 15% on your premium if you buy your homeowners and auto policies from the same insurer, but it’s a good idea to shop the policies separately as well in case you could do even better.

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Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.