Ways to Lower Homeowners Insurance Costs 

Are you looking to save money on your home insurance? You’re not the only one. Even with insurance rates rising year after year, plenty of people find ways to lower their insurance premiums. Even if you’re diligent about locking down the discounts and savings you can get, there’s always a chance that your agent isn’t offering every available option. And as much as you’ll want to believe it, there’s no such thing as magic that can drop your premiums overnight. At best, insurance companies will reduce your rates for being a good customer and taking reasonable steps to protect your home. At worst, they’ll cite something else entirely and raise your rates. Here are a few tips to help you cut costs on your home insurance without sacrificing coverage or too much peace of mind.

1. Raise your Deductible

One of the most common ways to save on your home insurance is to raise your deductible. By doing so, you can lower your premium by a significant amount — the Insurance Information Institute estimates savings of up to 25% when moving from a $500 to a $1,000 deductible. However, it’s essential to keep in mind that you’ll still be required to pay for the damage or loss of property that exceeds your deductible, even with a higher deductible. So, suppose you have a $1,000 deductible, and a fire destroys all of your possessions and damages everything in your house after you’ve already paid $500 worth of wear toward the fire (i.e., $3,000 total). In that case, you’ll still be responsible for the remaining $500.

2. Insure for Replacement Cost, not Market Value

It’s not as complicated as it sounds. If you’re a good customer, your insurance company will be more likely to adjust your rates down. They know that you will ultimately pay the total cost of replacing your possessions if destroyed or damaged by fire, theft, vandalism, or another disaster. The tricky part is that you have to be able to prove that the value of your possessions is worth more than what you paid for them. Make sure your home is insured based on replacement cost value (RCV) rather than actual cash value (ACV) or market value. Consumer Reports explains that RCV coverage pays the full cost to rebuild or replace, while ACV policies deduct for depreciation, leaving many homeowners significantly underinsured after a major loss.

3. Package your Home & Auto Policies Together

If you own a home and auto, you can save money by bundling both under the same insurer. This is especially true if you drive an older car worth less than what it would cost to replace it. If you’re shopping for insurance, look at the total cost of your two policies before comparing rates. According to NerdWallet, bundling home and auto policies can save you between 5% and 15% on each policy. Major carriers including State Farm, Allstate, and Progressive all offer multi-policy discounts, so it pays to ask about bundling options before finalizing any new purchase.

4. Newer/ Updated Homes May Be Eligible for Discounts

Still, you may be eligible for discounts on your insurance if you’ve recently moved into a new home. Insurers often reward newer construction because updated electrical systems, modern plumbing, and current building codes reduce the risk of fire, water damage, and structural failure. Policygenius notes that new-home discounts can reach up to 40% in the first year of ownership. However, if you move into a new home built within the last five years, be sure to confirm with your agent whether the existing seller’s policy transfers or whether you need a new policy in your own name. Ask your agent if you are shopping for insurance and want to know if your new home is covered by an existing policy or a new one.

5. Improve your Home Security

Still, consider installing some form of security system if you have a high-risk home located in a high-crime area. This is especially true if your home is in an isolated location. If you have a problem with vandalism or theft, you will be less likely to have disputes with your insurance company if your home has an alarm system. Consumer Reports reports that monitored alarm systems can reduce homeowners insurance premiums by up to 20% with many national carriers. In addition, it’s helpful to have working smoke detectors and carbon monoxide detectors throughout the house. Installing deadbolt locks, fire-resistant roofing materials, and storm shutters can further qualify you for additional mitigation discounts. If you don’t have functioning smoke detectors, you will be responsible for any resulting losses after a fire.

6. Maintain a Good Credit Record

Failing to maintain a good credit record will affect your ability to buy insurance at favorable rates. If you have poor credit, you must work to build a positive track record. That means paying all your bills on time, keeping your debt under control, and avoiding late fees and other charges that can negatively affect your credit score. Most insurers in states that permit it use an insurance-based credit score (IBCS) — a model derived from your FICO Score — to help set your premium. According to Experian, consumers with poor credit can pay significantly more for homeowners insurance than those with excellent credit — in some cases more than double. Monitoring your credit report through agencies such as Experian, Equifax, or TransUnion and disputing any errors can help improve your IBCS over time.

7. Stay with the Same Insurer

Still, do not switch insurers impulsively after you’ve already bought a policy. If an insurer refuses to offer you a policy because of your credit history, a new application elsewhere may not be easier. Consider waiting and trying again in six months while working to improve your credit standing. The Insurance Information Institute notes that many insurers reward long-term customers with loyalty discounts that can compound meaningfully over three to five years. Also, if you have a problem with an insurer, try to work out the issue before shopping for insurance again. State insurance regulators, accessible through the National Association of Insurance Commissioners (NAIC), can help mediate disputes if direct resolution fails.

8. Buy a Longer Policy

Still, you may want to consider purchasing a more extended policy if you are shopping for insurance and need to buy a policy with a term of five years or more. Premiums are generally lower for long-term policies. Also, if you have to file an insurance claim in the future, you will have more time to resolve the claim. The longer your policy term, the less likely you’ll have to file a claim. Policygenius advises that multi-year policies can lock in your rate and protect you from mid-term rate increases, which have been especially common since 2023 as carriers adjust for climate-related losses.

9. Reduce your Auto Coverage to Comprehensive Only During Winter Months

During the winter months, your automobile is more likely to be damaged by snow and ice than during the summer months. In addition, your vehicle is more likely to be damaged by potholes and other road hazards during the winter months. Thus, you should consider reducing your coverage to comprehensive only if you live in an area where winters are snowy and icy. NerdWallet explains that comprehensive coverage protects against non-collision events such as weather, theft, and falling objects, while collision coverage is what pays out when you actually hit something. If your vehicle is stored for the winter season, dropping to comprehensive-only can produce meaningful short-term savings on your overall insurance spend.

10. Review the Value of your Scheduled Items and Rec Vehicles at Least Once a Year

Still, such as a policy with a $500 or more deductible, you should review the value of your scheduled items and recreational vehicles at least once a year if you have a high-deductible insurance policy. If you have a costly item that needs to be repaired or replaced, an annual review can help you decide if it’s worth the cost to repair or replace the item. Rec vehicles also tend to depreciate. ValuePenguin notes that over-insuring depreciated items means you are paying higher premiums for coverage you may never fully collect on. Reviewing the value of your recreational vehicles and scheduled items at least once a year can help you decide if it’s worth keeping them on your policy or removing them to lower your premium.

How These Savings Strategies Compare

Frequently Asked Questions

What is the fastest way to lower my homeowners insurance premium?

The fastest way is to raise your deductible. Increasing your deductible from $500 to $1,000 can reduce your annual premium by up to 25% immediately, according to the Insurance Information Institute. You can make this change with a single phone call or online policy update through your insurer.

Does my credit score really affect my homeowners insurance rate?

Yes, in most U.S. states. Insurers use an insurance-based credit score (IBCS) derived from your FICO Score to help determine your premium. Experian reports that homeowners with poor credit can pay more than double the premiums of those with excellent credit. Improving your credit by paying bills on time and reducing outstanding debt will lower your IBCS over time. Note that California, Maryland, and Massachusetts prohibit the use of credit scores in setting home insurance rates.

How much can I save by bundling home and auto insurance?

Bundling home and auto insurance with the same carrier typically saves between 5% and 15% on each policy. On a combined annual premium of $4,000, that translates to $200 to $600 in savings per year. Major carriers such as State Farm, Allstate, and Progressive all offer multi-policy discounts.

What is replacement cost value, and why does it matter?

Replacement cost value (RCV) is the amount it would cost to rebuild or replace your home or belongings at current prices, without deducting for depreciation. Actual cash value (ACV) policies subtract depreciation, which can leave you thousands of dollars short after a major loss. Consumer Reports recommends all homeowners insure for RCV to avoid being underinsured.

Can installing a security system actually lower my insurance?

Yes. A UL-listed, professionally monitored home security system can reduce your homeowners insurance premium by up to 20% with many major carriers. Additional savings can come from smoke detectors, deadbolt locks, fire-resistant roofing, and water leak sensors. Ask your insurer for a full list of eligible home protection discounts before purchasing any system.

How does staying with the same insurer save me money?

Many insurers offer loyalty discounts that grow over time — typically starting after three years of continuous coverage. The Insurance Information Institute notes these discounts can compound meaningfully over a five-year period. Staying with the same insurer also avoids potential gaps in coverage during policy transitions and preserves your claims history with that carrier.

Is a longer-term homeowners insurance policy always cheaper?

Multi-year policies often come with lower annualized premiums and protect you from mid-term rate increases, which have been common since 2023 as insurers adjust for climate-related losses. However, multi-year policies are not universally available. Ask your agent whether a two- or three-year lock-in option is offered, and review the cancellation terms before committing.

What discounts are available for newer or recently renovated homes?

Homes built within the last 10 years — or homes with recently updated electrical, plumbing, or roofing systems — often qualify for new-home or updated-systems discounts. Policygenius notes these discounts can reach up to 40% in the first year for brand-new construction. Inform your insurer of any major renovation, as it can trigger a rate review and potential discount.

Should I reduce my auto coverage during winter months to save money?

If your vehicle is stored and not driven during winter months, reducing to comprehensive-only coverage eliminates collision and liability costs while still protecting against theft, weather damage, and fire. This strategy is best suited for secondary vehicles or seasonal-use cars. Never reduce coverage on a vehicle that is still being actively driven on public roads.

How often should I review my homeowners insurance policy?

At minimum, review your policy once per year — ideally at renewal time. Review it immediately after any major home renovation, purchase of high-value items, or significant life change such as marriage or the addition of a home-based business. Annual reviews allow you to remove coverage for depreciated scheduled items, update replacement cost estimates, and identify newly available discounts.