Does shopping around for homeowners insurance really save money?

While shopping around is the best way to find a better rate, recent spikes in insurance rates have made finding a better deal more difficult, especially in parts of the country where coverage options are becoming more limited, like Florida and California.

The 2024 J.D. Power U.S. Home Insurance Study, which ranks the best and worst home insurance companies and examines shoppers' habits, shows that almost 40% of homeowners receiving a premium increase will likely shop for new coverage. However, most of the homeowners who were actively shopping at the time of the survey didn’t make a change.
In 2023, home insurance rates increased an average of 11%, according to S&P Global. While insurers cite the rise in labor and material costs as a reason for higher rates, these increased rates encourage homeowners to shop for cheaper coverage.

Why aren’t people switching homeowners insurance companies?

The J.D. Power Home Insurance Study found that more people are shopping for home insurance but are not necessarily changing insurers. Insurance rates are increasing across the board, so finding a substantially lower rate is becoming more complex.

South Carolina residents Tony and Leah Claflin built a home in 2023 and just renewed their homeowners insurance policy. They’ve been with Auto-Owners for years, and although their rate went up on renewal, and they shopped around, they didn’t switch. 

“We went with Auto-Owners and bundled home and auto coverage. We use a local insurance broker who shops for our coverage yearly,” says Leah Claflin. She went on to say that paid-in-full and bundling discounts meant their current policies were still the cheapest option.
Additionally, some states, like Florida, have seen insurers withdraw coverage due to many natural disasters. Consumers in those areas find it challenging to find adequate home insurance and have few choices for coverage, so they stay with their current insurer.

How much can you save on home insurance when you shop around?

The average home insurance rate is $2,601 yearly, but many factors, such as your home's age, location, insurance coverage levels, and credit score significantly affect rates.

According to our data, Allstate has the lowest annual average rate, at $2,098, while Travelers’ rates are the most expensive, averaging $3,701 annually. You wouldn’t know how much you could save if you didn't compare multiple quotes.

It’s important to compare rates, discounts, and coverages often to find the insurer that fits your needs. This proactive approach can lead to substantial savings.

Why should you shop around for home insurance?

Each insurance company has its own formula for determining rates. For example, one insurer may consider the age of your home most important while another considers how many claims you’ve filed to be most important.

Additionally, personal factors can change from year to year. Your credit score could increase, or adding safety features to your home, like an alarm, can earn discounts.

Shopping around to see which insurer is the best fit is essential. Since algorithms can change, shopping each year helps ensure you’re getting the cheapest coverage.

Home and auto bundling: Why are people unbundling?

Bundling home and auto policies has always been viewed as the easiest way to save money on insurance. However, that is changing, and bundling home and auto may not be the best deal.  Bundling discounts offer lower rates, but many consumers find that having separate insurers gets them the best deal.

Many people are discovering it’s sometimes cheaper to get homeowner and auto insurance from two different companies. Since no one-size-fits-all formula for determining insurance rates exists, one company may offer more affordable auto coverage while another has lower home insurance rates.

According to the J.D. Power study, homeowners are less likely to switch auto coverage if they change home insurers. Data shows that many people are more concerned with price than the convenience of keeping insurance policies with one company.

How to find the best price on homeowners insurance

Although shopping for insurance is an essential part of the process, other ways exist to get the cheapest homeowners insurance available.

To get the most affordable homeowners insurance:

  • Review coverage needs. Get an up-to-date estimate to determine home replacement costs and ensure you have enough coverage to meet those needs. Having too little or too much coverage can significantly increase costs.
  • Raise your deductible. A higher deductible means lower insurance rates. However, you will have greater out-of-pocket costs if you file a claim.
  • Bundle policies. While you can sometimes find cheaper coverage if you shop for separate policies, bundling can save you money.
  • Take advantage of discounts. Insurance companies offer numerous discounts in addition to a bundling discount. For example, consider safety systems and occupational discounts.
  • Avoid filing claims. Filing claims leads to higher home insurance rates. Consider paying for minor repairs and damages instead of filing an insurance claim.

Sources

J.D. Power. “2024 U.S. Home Insurance Shopping Study.” Accessed October 2024.

Frequently asked questions

How often should I shop around for home insurance?

Ideally, shopping for home insurance each year will ensure you get the most affordable rates. Since most policies are for a one-year term, shopping just before your policy expires lets you avoid cancellation fees and allows you time to renew if your current policy is best.

How many insurance quotes should I get?

Experts recommend that you compare three to five insurance quotes annually.

Is J.D. Power a reliable source?

Yes, J.D. Power has been around for over 50 years and is a trusted voice in the insurance industry. The company specializes in learning customer behaviors and elicits customer input to rate satisfaction in various areas.

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