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Homeowners insurance discounts

By Posted : 02/03/2017

Home insurance discounts to ask for and how they work

Home insurance companies offer discounts that can save you hundreds, but it's up to you to make sure you're getting all the homeowners insurance discounts you deserve. That way you can ensure you have sufficient coverage, but at the same time getting the cheapest home insurance for your particular situation.

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Bundling insurance, staying with an insurer, renovating your house, adding a security system and setting up automatic billing can all save you money on your home insurance bill.

At the time of a new policy, insurers will likely give you a discount for bundling auto and home insurance or staying with that company for many years. But you will have to notify your insurer about other possible discounts, such as when you add a sprinkler system or new wiring to your house.

Don't wait for renewal time to tell your insurer. You can start enjoying the benefits of discounts today.

This guide will look at how home insurance discounts work, examples of home insurance discounts that most insurers offer, limits on how much you can save on discounts and other ways to save on your home insurance bill other than discounts.

How do home insurance discounts work?

Similar to car insurance, insurers base your home insurance rates on three factors:

Base rate -- This takes into account your risk factors, such as the location and building materials and age of your home.

Surcharges - Surcharges raise your rate. Filing claims lead to surcharges on your home insurance bill, as can having a certain breed of dog or other items that are seen as risky to a home insurer.

Discounts - Discounts help lower your rate. There are various types of discounts available and they vary by state and company. While one insurer may offer you a 10 percent discount for paying your bill in full, another might only give you a 5 percent discount. But every little bit helps, right?

When to ask for home insurance discounts

You don't have to wait to renew your policy to get discounts. Contact your home insurance company and provide them documentation in cases such as a new roof or security system.

If you have a new policy, look through your insurer's information for any discounts for which you might be eligible. Don't be afraid to ask your insurance company if you're not sure if you're eligible for a discount.

Here is a list of home insurance discounts that could save you money:

Home and auto bundle

This is one of the biggest discounts you can get. In fact, Travelers gives up to 15 percent to bundle your auto, home, and even an umbrella insurance policy. Allstate claims you can save up to 25 percent on your auto premiums and up to 35 percent off your home premiums when you bundle your policies. Saving on both sides is a big plus to having multiple policies with the same insurance company.

Insurers give generous bundling discounts (also called multi-policy discounts) because you're giving them more of your business.

An insurer will usually give you the discount when you start your policy or begin bundling multiple types of insurance. If you bundle, make sure you're getting the discount that you deserve.

Here are average homeowners insurance savings, as a percentage, by state, for bundling home and auto coverage, according to Insurance.com's homeowners insurance rate analysis of major insurers for nearly every ZIP code in the country. Findings showed a nationwide average savings on home insurance of 20 percent. You can save about 8 percent, on average, on your car insurance when you bundle it with your home coverage.

Home and auto insurance bundle discount by state

State% bundle discount
Alaska 3%
Alabama 22%
Arkansas 32%
Arizona 17%
California 12%
Colorado 24%
Connecticut 23%
DC 15%
Delaware 21%
Florida 5%
Georgia 15%
Hawaii 2%
Iowa 19%
Idaho 18%
Illinois 19%
Indiana 22%
Kansas 21%
Kentucky 32%
Louisiana 9%
Massachusetts 24%
Maryland 24%
Maine 18%
Michigan 33%
Minnesota 25%
Missouri 29%
Mississippi 28%
Montana 18%
North Carolina 9%
North Dakota 14%
Nebraska 22%
New Hampshire 19%
New Jersey 16%
New Mexico 24%
Nevada 14%
New York 21%
Ohio 24%
Oklahoma 31%
Oregon 21%
Pennsylvania 24%
Rhode Island 22%
South Carolina 17%
South Dakota 18%
Tennessee 17%
Texas 25%
Utah 15%
Virginia 24%
Vermont 20%
Washington 15%
Wisconsin 23%
West Virginia 15%
Wyoming 17%

Loyalty

If there is something that insurers love more than bundling, it's loyalty. These types of discounts are often up to 10 percent.

One caveat: You usually have to remain in good standing and many insurers only offer the discount to people who are claims-free for a certain period of time.

Loyalty discounts are great reasons to stay with your insurance company, but that doesn't mean you shouldn't shop around. It's still a good idea to get quotes from other insurers every few years at a minimum.

Your insurer's 10 percent loyalty discount might pale in comparison to another insurer's new customer discount and other perks.

New customer

Changing insurance can save you up to 10 percent. Beware: Most insurers only include the discount for a limited period. So, you'll want to figure out whether the 10 percent discount for two years is worth changing your insurance -- and losing any loyalty discount.

Being claims free

Insurance companies don't like to pay claims. They dislike it so much that you can get as much as 20 percent off your bill from some insurers if you don't file claims for 10 years. For a lower discount, some insurers are okay with only five years of no claims.

Before filing a claim, it's always good practice to figure out whether it's worth it.

Let's look at an example. Let's say a leaky roof damaged your ceiling. There is a watermark on the ceiling, but there isn't any other damage. You have a $1,000 deductible and repairs will cost about that amount.

In this case, it's best to handle the repairs on your own dime. If you file a claim, you'd have to pay the $1,000 deductible AND your rates will likely increase because you filed a claim.

In this case, you'd wind up paying more for filing a claim than paying for it yourself.

Before filing a claim, you should make sure that you're not going to actually lose money in the long run because of filing a claim.

Setting up automatic payments

One of the easiest ways to save on your home insurance is by setting up automatic payments. Many credit cards have a similar program.

You allow the company to automatically get paid through your bank account. If you're comfortable giving your insurer that information, many insurers give a 5 percent discount for setting up automatic payments.

Paid in full

Paying off your annual home insurance bill can get you a discount of about 5 percent.

Insurers like when members pay in full because it means they have their money and won't have to send more bills. You like it because you won't have to pay monthly fees -- and you can get a discount too.

Early signing

Many insurers offer a discount of about 10 percent if you sign up for a new policy before your current one expires. Insurers would rather you stay with them than shop around. This early signing discount is one way to keep you on board.

Home security

Depending on the security enhancements and type of alarm system, you could get as much as a 20 percent discount. The 20 percent figure is for a high-end central alarm security system that alerts the police of a break-in and includes fire protection.

There are smaller discounts of usually around 5 percent for dead bolt locks and passive burglar alarms that sound, but don't alert the police directly.

Fire sprinklers and smoke detectors could also get you a small discount so check with your insurance company to see if you're qualified.

Retirees

Retirees over 55 can enjoy a 10 percent discount. The reasoning is that retirees are more often at home so they will spot a problem earlier than someone who works 9-to-5.

For instance, imagine if a basement pipe bursts and floods the basement one morning. A retiree who spends time at home during the day will likely hear the water flowing and call a plumber -- after hopefully turning off the water to the home.

Being home can avert a flooded basement and thousands of dollars' worth of damage, which is why insurers provide the senior retiree discount.

Technology

New in-home technology protects homeowners from expensive clean-up costs and protects them from disaster.

Take the example about the flooded basement above. There is now technology that actually stops problems immediately.

Active sensors not only sound an alarm, but the latest technology can shut off water or gas when there's a break. No one has to be home for the technology to kick in.

This kind of technology can come with a hefty price tag, but you can make up part of the cost with an in-home technology discount of as much as 10 percent.

Non-smoker

Do you need another reason to kick the habit? You can actually save money on your home insurance by not smoking.

Improved building materials, fire suppression systems, and fire safety education have led to fewer structure fires, but smoking-related fires and fatalities remain a problem. The National Fire Protection Association reported 90,000 smoking-material fires in the U.S. in 2011. These fires caused $621 million in property damage.

By not smoking, you'll not only improve your health and save the $7-plus-a-pack you spend on cigarettes, you can get a discount of as much as 15 percent on your home insurance.

New construction and renovations

You can pay less on your insurance by living in a new home or renovating your home.

Improving infrastructure, such as plumbing, wiring or a roof can lead to a discount.

Installing a more durable Class 4 roof or being certified by a Leadership Energy and Environmental Design (LEED) organization as a "green" home could get you up to a 10 percent discount.

Living in a gated community or belonging to a neighborhood watch or homeowners association

A gated community, a neighborhood watch and a homeowners association show insurers that you're a less risk.

Insurers often give an at least 5 percent discount, but some offer as much as 20 percent off. So, if you fit any of these situations, contact your insurance company.

Married or widowed

Being married or widowed can get a 5 percent discount. Having a spouse means you're likely more settled than if you're single. Plus, there is a better chance that someone will be in the house than if you're single.

Widowed people are usually older and more likely to be at home more too.

Inflation adjustment

You can get a discount if you're willing to increase your home's dwelling coverage to reflect an inflation increase. Insurers are then able to raise the coverage of your home in case of inflation.

This lets the insurer keep up with rising costs and home rebuilding costs rather than increase the dwelling coverage at renewal time.

Limits on homeowners insurance discounts

You've read about all of the above discounts and you're adding them up in your head. Now, for the bad news -- Insurers usually place limits on the total percentage of discounts you can receive.

This limit is often set at 25 percent. So getting discounts is great, but at the end of the day what you need to look at is the final premium you'll pay. A company with a lower base premium and fewer discounts may beat out a company that offers many discounts but has a higher overall premium.

How else can you save on home insurance other than discounts?

An easy way to decrease your homeowners' insurance premiums is to raise your deductible. By simply increasing your deductible from $500 to $1,000, you could save hundreds each year. Our "Homeowners insurance deductibles: How to choose the right one" article provides rates by state and shows the savings earned with a higher deductible.

If you are deciding whether to increase your deductible, make sure you have access to money to pay the deductible if you need work. A good idea is to set aside the deductible amount so you will have that money ready in case you ever need it.

Home insurance discounts are not always automatically applied to policies so it's a good idea to review your insurer's discounts now to see whether there are any that would benefit you. And discount and premiums change, so at every renewal you should check with your insurer to see if there are any new discounts you're eligible for and also shop around to make sure your insurer is still the best one for your needs.

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