Saving on Renter's and Homeowner's Insurance
Welcome to Saving Money with Andrew!
Almost everyone has renter’s or homeowner’s insurance. Most landlords and mortgage lenders require it, and having a policy is just common sense. But, these policies are a major expense—the average renter’s policy is over $150/year and the average homeowner’s is about $1,500/year. And if you live in a major city or a high-cost suburb, you may pay significantly more. So any opportunity to save a bit is quite valuable. Here’s how I think about saving on these policies:
This is obvious, but important. Typically, I obtain quotes from at least three insurers. I’ve also used comparison shopping tools such as Policygenius, which allow you to compare quotes from multiple providers, with some success.
Use Bundle and Affinity Discounts
Most insurers offer discounts for purchasing multiple insurance products. Although there are exceptions, if you have an auto policy and your provider offers a bundle discount it’s likely that your best deal on homeowner’s insurance will come from them. For example, GEICO offers 10% off on auto insurance if you also purchase a homeowner’s policy.
In addition, certain insurers offer discounts for certain groups, such as alumni of certain colleges, or members of other organizations such as the AARP or AAA. Make sure to ask your insurer if they offer those discounts.
Don’t Get More Coverage Than You Need
While it’s important to fully insure against damage to your residence, it’s common for people to have more insurance than they need, particularly for personal property. We received a quote that included $250,000 of coverage for our personal property (electronics, clothing, and furniture) but it’s unlikely our stuff is worth even one-third that amount. By reducing our personal property coverage to the minimum the insurer would permit ($180,000), we reduced our premium by over $70/yr.
In addition, you may be insured for events so unlikely that they may not be worth insuring against. On one policy, we found we had earthquake coverage that cost $300/yr, despite the last two major earthquakes in our area dating back to 1884 and 1737, neither of which caused significant property damage. By contrast, in our area, flood coverage is much more valuable.
(Probably) Max Out Your Deductibles
The purpose of insurance is not to protect against every loss. Indeed, most people don’t even file small insurance claims because of the hassle and the likelihood of the claim increasing future premiums. Instead, insurance is meant to cover against losses that would be financially devastating, like the destruction of a portion of your home.
If the purpose of insurance is to protect against these very large losses, it is often worth having the highest deductible possible (provided that you can afford the reduction to your insurance payment if a significant loss event occurred), though it will depend on your individual situation. In our case, we reduced our homeowner’s premium by $480/yr by increasing our deductible from $500 to $2500.
Keep Track Of Your Insurance Requirements
When we purchased our home, we were (unfortunately) a bit restricted in our insurance options. Our bank required us to carry an insurance policy with dwelling coverage equal to the current loan balance, which is far in excess of the value of the house (a large portion of the home value is in the land, not the house). Very few insurers would write us a policy for that amount, so we were forced to use an insurer we wouldn’t have chosen otherwise, and the excessive dwelling coverage resulted in much higher premiums.
But on the bright side, as we pay down our mortgage we’ll be able to reduce our coverage amount, which will reduce our premiums as well. If you were required to purchase coverage for your initial mortgage balance and you’ve paid down a lot of your mortgage since then, consider whether you can reduce your coverage (to a still sufficient amount) and save on your premium.
And now…Andrew’s pick(s) of the week:
Call the Midwife
I’ve been enjoying Call the Midwife, a great drama series about midwives working in London in the 1950’s, which was recently renewed for its 11th season. If you like ER and other medical dramas, or other similar BBC period pieces (like recent recommendation All Creatures Great and Small), you’ll probably like this too.
I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.
 Note that many forms of personal property, including jewelry and musical instruments, are often not covered unless you purchase a separate rider.