First-Time Buyers: How to Save Money on Your Home Insurance

by Andra Hopulele
4 min. read

Buying your first home is an exciting, if somewhat stressful, experience. As closing day nears however, it’s important to make sure you’ve got everything covered. Homeowners insurance is vital and it can be costly and time-consuming to forget it.

Despite this, many first-time buyers leave it until the last minute. In a bid to get covered before closing on the deal, they often end up paying a high price. Fortunately, with a little forward thinking, you can save money on your home insurance with ease.

Things That Can Make Your Insurance More Expensive

Before seeing how you can save money on your homeowners insurance, it’s good to know what can make it more expensive in the first place. The location of your home can be one major factor that increases the cost of your insurance. Areas that are prone to adverse weather conditions, natural disasters, and high crime rates will generally increase the cost of your policy. Even apparently nondescript locations can be more expensive if other people in the area have made a lot of claims.

Another potential issue relates to any previous insurance policies you’ve held. If an insurance company has previously canceled one of your policies for non-payment, it can result in penalties that increase the cost of your home insurance. This doesn’t have to relate to a real estate policy either, and even a canceled car insurance can reflect badly on you.

Finally, any special features on your home also have the potential to make your insurance more expensive. Things like special materials, historic buildings, and expensive appliances will all raise the cost.

How to Save Money on Your Homeowners Insurance

Shop Early and Shop Around

Huge numbers of new homeowners leave buying insurance until the last minute, and normally buy directly from their lender. Unfortunately, while this is convenient, it is also likely to cost more. It’s best to shop around and spend at least 30 days looking at your options. In this time, you can learn more about what’s on offer, choose the best coverage for you, and compare different companies. Plus, you can seek out specialized home insurance agents, rather than accepting the generalized terms of your lender. Ideally, you should start looking into insurance once your offer has been accepted.

Don’t Insure at Market Value

When you insure at market value, you are only covered up to the current cash value of your home. However, the cost to rebuild your home and replace your belongings can be higher than that, so it’s worth insuring at replacement cost. The latter will be more expensive, but can save you thousands of dollars in the long run. Having said that, in some cases the cost of rebuilding might be lower than market value, especially if your home has lots of land. In this case, it’d be worth insuring at lower than market value. If in doubt, be sure to speak with an expert.

Be Careful with Claims

Whether you have your homeowners insurance or renters insurance, it’s best to take care not to claim too often. It might be tempting to file a claim for every small issue, but it’s sensible to think of home insurance as being for large claims. By filing lots of small claims, the provider may eventually refuse to provide cover when it comes to renewing. Plus, you lose out on your no-claims-discount in the future. If you do need to file a claim, be sure that you have good records of your home’s inventory and claim within the allotted time frame.

Buy a Bundle

If you need home, life, car or even pet insurance, you can often make big savings by bundling these policies up and purchasing from just one provider. The vast majority of insurance providers will offer large discounts for doing so.

Have a Home Inspection

A home inspection can forewarn you of any major issues with your new home, and it’s best to be aware of these in advance. Even if there isn’t immediate risk, it’s good to know what might happen in the next decade. This way, you can make sure you’re covered for the right issues.

Take Out Renters Insurance

If you’re still renting, it’s a good idea to take out cover for your rental unit. This is normally very affordable, and not only does it keep you and your belongings protected during your lease, but it can reduce the cost of your homeowners insurance. In some cases, having just a few years of claims-free renters insurance can lead to discounts of up to 25% on your homeowners insurance.

The more you know about insurance, the better you are able to keep yourself fully protected while saving money. 

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