Don’t cancel your homeowners insurance if you can’t afford it, just find a cheaper plan

At the peak of the pandemic, the U.S. unemployment rate rose to 14.8%, the highest rate on record since the Congressional Research Service began collecting data in 1948. This type of financial uncertainty is likely to drive many Americans to make cuts to their budgets.

To free up some resources, you might want to start with recurring charges, but you should avoid completely cutting out something like homeowners insurance, which can provide crucial protection for you and your family.

HOW TO GET A CHEAP HOMEOWNERS INSURANCE POLICY FOR YOUR NEEDS

Why you need homeowners insurance

Homeowners insurance is a must, whether you’re just moving in or you’ve paid off your house. While the government doesn’t require it, most mortgage lenders do.

Along with meeting your lender’s requirements, homeowners insurance can help you protect one of your biggest assets. Here are a few key features of a standard homeowners insurance policy:

• Dwelling coverage: Your policy will pay to repair or rebuild your home if it is damaged by a covered peril, and you can insure other structures on your property.
• Personal property coverage: Your policy can help you replace your belongings, like clothing, jewelry, furniture, and electronics.
• Additional living expenses: Policies also pay for temporary living expenses if your home is being repaired following a covered incident.
• Liability: If you’re responsible for damage to someone’s belongings or an injury, your policy can pay for personal property, legal, and medical expenses.
• Medical coverage: Regardless of fault, if someone gets injured on your property, home insurance can foot the bill for medical care.

When you factor in your house, possessions, living expenses, and potential liability, the need for homeowners insurance becomes clear.

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How to reduce your home insurance rates

While canceling your policy probably isn’t a smart move, looking for cheaper coverage is. To lower your home insurance costs, try some of the strategies below.

1. Shop around

The best way to get lower rates is to compare several providers. Depending on where you live and the type and level of insurance coverage you need, one company might offer lower rates than another.

2. Increase your deductible

Another way to save money on home insurance premiums is to adjust your deductible, the amount of money you’re required to pay out of pocket before coverage kicks in. Most companies allow you to set a standard deductible amount between $500 and $2,000, with separate deductible requirements for storm damage in higher-risk areas.

The higher your standard deductible is, the lower premiums are, and vice versa. If your current deductible is $500, you could save significantly by increasing it to $1,000.

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3. Make your home safer

Many homeowners insurance companies offer insurance discounts to policyholders for installing security systems with central monitoring, as well as home security features like deadbolts. You could also save by having smoke detectors, carbon monoxide detectors, and sprinklers.

4. Bundle your home and auto policies

Many companies that sell different lines of insurance offer multi-policy discounts. You may be able to save 10% or more on insurance premiums by purchasing your home and auto insurance policies together from the same provider.

5. Review your policy

It’s important to take inventory of your home and belongings periodically and consider depreciation. In addition to taking inventory of your stuff, note any changes that could lower the cost of coverage options.

For example, if you’ve recently paid off your mortgage, made upgrades to your home, or even improved your credit score, update your insurance company to see if you could be eligible for better rates.

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Key takeaways

Without homeowners insurance, you could be left empty-handed if disaster strikes. Homeowners insurance provides extensive protection for your home and possessions, and going without coverage isn’t worth the risk.

To lower the cost of your policy, try:

• Comparison shopping
• Changing your deductible
• Adding safety features
• Finding home insurance discounts
• Reviewing your policy and life changes

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