How Often Should You Shop for Homeowners Insurance?

Having adequate insurance is one of the most important things you can do as a homeowner. If your home were to be damaged, it would cover the cost of repair, helping to ease the financial burden.

However, most people take out their homeowner’s insurance policy and then don’t think twice about it in the future. Unfortunately, this can end up costing you money. With insurance premiums changing all the time, what might have been a low-cost plan may no longer be the best option.

This means it’s crucial to periodically shop around for homeowners insurance to ensure you’re getting the best coverage at the right price.

But how often should you shop for homeowners insurance? Keep reading as we explore this question.

Shop for New Home Insurance Every Year to Maximize Savings

There is no firm rule about how often you should shop around for homeowner’s insurance. However, it’s good practice to spend some time at the end of the year going through your finances. Use this time to compare your current insurance coverage and costs to what else is available.

Reasons Why You Might Want to Shop for Homeowners Insurance More Frequently

While you should usually comparison shop for insurance once a year, there are also times when you should do it more frequently.

When You Make Upgrades to Your Home

With home equity on the rise nationwide, more and more people are completing home renovation projects. Some home upgrades can affect the insurance coverage you need, like finishing a basement or building an addition to your home.

Making large upgrades can increase your home's replacement value, so it’s important to ensure you have enough coverage.

Upgrades can also change your liability. For example, if you were to install a swimming pool, your liability would increase, affecting how much you’d pay for homeowners insurance.

This would be the perfect time to compare the cost from your current insurance company with premiums from a couple of alternatives.

Your Home Has New Occupants

If you get married, have kids, or adopt a pet, this is another great time to review your homeowners insurance. With new people living in your home, you’ll want to ensure each person's belongings are fully covered.

Adopting a dog can increase your liability, especially if you have a dog known to be more aggressive. Make sure your coverage is appropriate for the four-legged addition to your family.

How Often Are You Allowed to Re-Shop?

Most homeowners insurance companies don’t have set rules for how long you need to keep your policy in place. This means you can switch whenever you want. However, depending on your insurance company, they may charge a termination fee.

A misconception that many people have is that since you typically prepay six or 12 months' worth of insurance premiums, you won’t get the money back if you switch in the middle of the term. However, this isn’t true. If you decide to switch companies in the middle of your policy term, you will receive a refund check for any prepaid months after the termination date.

Factors that Affect Your Homeowner's Insurance Rates

Most people end up changing insurance companies because their rates have gone up. And while insurance rates are largely determined by each individual insurer, there are some common factors that each will use to determine premium amounts. These include the following:

• Age and condition of the home
• Claims history
• Credit history (not all states allow this)
• Deductible
• Home renovations
• Location
• Replacement cost of the home
• Roof’s condition
• Security and safety features
• Having a swimming pool

How to Lower Your Homeowners Insurance Rates

If you’re looking to reduce how much you’re paying for homeowners insurance, there are several things you can do.

Shop Around

The best thing you can do to immediately lower your homeowner's insurance premiums is to shop around. Start by digging into your current policy and writing down all your different coverages. Then, pick two or three different companies and find out what your premiums would be with the same coverage amounts.

Increase Your Deductible

Like other types of insurance, the premiums you pay for homeowner’s insurance can fluctuate based on your deductible. Most people want to keep their deductible low to reduce their out-of-pocket expenses if they have a loss. However, if you want to reduce your monthly insurance premiums, you have the option to increase your deductible. While you’ll pay less each month for your coverage, you’ll pay more if you need to file a claim.

Make Home Improvements

Home improvements can often help reduce homeowner’s insurance premiums. For example, if you live in Colorado, hail storms can be bad during the spring and summer. By installing impact-resistant shingles on their homes, some homeowners may be able to reduce their premiums by a few hundred dollars per year.

You can make many other improvements to your home that could reduce your insurance premiums. Some include:

• Indoor sprinkler systems
• Updating older electrical systems
• Adding storm-resistant windows
• Removing a wood-burning fireplace

If your goal is to reduce your premium, check with your insurer to ensure that any home improvements you plan will actually lower your premium.

Bundle Your Policies

Most insurance companies will offer discounts if you use the same company for all your policies. Instead of having car insurance with one company, homeowners insurance with another, and small business insurance with a third, you can bundle all these policies together with one company and receive a discounted premium.

Add Home Security

Adding a home security system can be an inexpensive upgrade to your home, but it can help reduce your insurance premiums. You can build your own system with components from a company like Ring or go through a full-service provider like ADT.

Improve Your Credit

Not every state allows insurance companies to underwrite policies based on credit scores. However, most companies take advantage in the states that allow this practice. This means the higher your credit score, the better your insurance rates will likely be. If you have a lower credit score, spend some time improving it by making your payments on time and reducing the amount of credit you’re using each month. The end result could be lower insurance premiums.