Homeowners insurance rates are exploding in 2023. Inflation, material and labor costs, and historic catastrophic storm activity are among the main reasons for the increase. The insurance industry anticipates another two years of rising rates and tightening guidelines on who they’re willing to insure. But fear not, we’re going to provide you the ammo you need to combat these rising costs.
Warning: don’t go too cheap
Okay, so we have to say this first because it’s very important. We’re going to give you the inside scoop on ways to save, but you can take this too far. Remember, we’re talking about your home. It’s likely your largest tangible asset.
When someone has a claim they never say, “Man, I’m sure glad I chose the cheapest insurance!” Insurance sucks to pay when you don’t have to use it but it’s your saving grace when something bad happens.
We want you to get a good deal, but not at the expense of having inadequate coverage. This is why we have minimum recommended coverages. Okay, mini-rant over from an insurance insider who witnesses this everyday.
Raise your deductibles
One way to combat exploding homeowners insurance rates in 2023 is to raise your deductibles. Yes, “deductibles” plural, because many policies have more than one deductible depending on how your home was damaged.
For example, you may have a Wind/Hail deductible that is different from your All Other Perils deductible. This doesn’t mean you have to pay both should something happen. However, you could choose a $1,500 Wind/Hail deductible and a $1,000 All Other Perils deductible.
Weigh your risk. If you live in an area that is less prone to hail damage, maybe increasing that deductible is something you want to consider.
Higher deductibles result in lower insurance premiums. If you can afford to settle a claim up to a certain amount, raising your deductible may be beneficial.
Caveat
Make sure you already have an emergency fund set aside to cover your deductible. Otherwise, you risk getting yourself into a financial bind.
Your emergency fund should be much more than your deductible. If you only have enough to cover your home insurance deductible, you now don’t have any funds left for anything else like a furnace going out, a car breaking down or a car insurance deductible. Stuff happens.
Discounts
Insurance companies usually offer discounts to homeowners who take steps to reduce their risk of filing a claim. If you invest in home security systems, smoke detectors, fire alarms, and other safety devices, you’ll qualify for discounts on your premiums.
Smart home devices such as water detection and automatic water shutoff valves are now getting discounts as well. The more precautions you take, the better your chances of qualifying for these discounts.
Multi-policy discount is one of the largest discounts you can earn. Often times referred to as “bundling” (thanks Flo) this discount is typically around 15 – 20%. You can earn this discount for adding Auto, Umbrella, Boat, Motorcycle or a rental property.
Lower personal property coverage
Sometimes your personal property coverage can be well beyond the value of what you have. Typically, this coverage is not a flat amount but rather a percent of your dwelling coverage.
Example
If your home is insured for $400,000 and your personal property is defaulted to be 70% of the dwelling, you have $280,000 in coverage.
Just remember, your high value items aren’t included in your general personal property limit. They must be separately insured. These are items like jewelry, firearms and collectibles that are generally worth more than $2,000 per item.
Re-run your insurance score
Most people aren’t familiar with this one. Your insurance score is calculated based on several factors. While companies don’t give away their secret sauce, your credit score is a part of this insurance score calculation. It’s actually the largest factor.
Don’t worry, having your insurance score re-ran will not result in a hard inquiry on your credit report. This allows you to shop insurance without having to worry about a bunch of hard inquiries lowering your credit score.
So, if your credit score has increased since you originally started your policy, you may be able to save significant money. We’re talking up to 50%!
If your spouse has a better credit score you may be able to use theirs to save as well. This doesn’t work with all companies because some use a blended score. However, most still allow you to choose the spouse with the highest score.
Shop around
Compare quotes from several companies and analyze their coverage, discounts, and customer service. An independent agent can help you shop around and provide personalized advice that will help you make an informed decision.
You want to make sure you’re dealing with a quality insurance agency. Check out their Google Reviews first. Humble brag, here’s ours – Google Reviews.
Final word
While homeowners insurance rates are exploding in 2023, there are strategies you can use to save money. Raising deductibles, qualifying for discounts, shopping around, and working with a trusted independent insurance agent are just some of the ways you can reduce your cost.
By re-evaluating your coverage periodically and making informed decisions, you can save money on your homeowners insurance and still have a great policy.
Frequently asked questions
15 – 20% depending on the insurance company. The more policies you bundle, the more you can potentially save. For example, home, auto, umbrella, rental home, motorcycle, boat and rv.
You could earn homeowners insurance discounts by having home security devices, smart home devices, bundling your insurance or a newly built home.
Independent agents have access to many homeowners insurance companies and can help you compare coverage and price to find the very best fit for you.
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