You Won't Believe How Much I Saved on Homeowners Insurance by Shopping Around
KEY POINTS
- My homeowners insurance company recently decided to stop offering coverage in my state, so I was forced to shop for new coverage.
- After a few years of thinking I was getting a good deal, I was shocked to find out I could save 25% from the cost of my old policy.
- You don't have to wait until your hand is forced -- shopping around and reviewing your coverage and deductibles can help you save money on your coverage.
If you've noticed your homeowners insurance premiums rising in recent years, you aren't alone. The average homeowners insurance premium in the United States increased by more than 11% in 2023, according to S&P Global, and this is on top of an above-average increase in 2022. In some states, the increases have been far greater.
Many homeowners rarely shop around for coverage after they obtain a policy. I'm guilty of this myself, assuming the recent rate increases I've seen have been simply a result of market conditions. But my hand was recently forced, as the homeowners insurance provider I've been using since I bought a house in Central Florida in 2021 decided it would no longer offer coverage in the Sunshine State.
To put it mildly, I had a case of reverse sticker shock when I obtained some new quotes. Here's how much I was able to save on my homeowners insurance premium by obtaining a new policy and some steps you can take if you haven't shopped for insurance in quite some time.
Here's how much I saved by switching
I won't keep you in suspense. For my policy that ran from May 2023 until just recently, my annual premium was $4,230. My new policy, which just went into effect this month, has the exact same level of coverage and deductibles, and has a premium of $3,189. That's an annual savings of $1,041, which is 25% less than my old premium.
Like most lenders, mine only conducts an escrow analysis once a year, and mine happened a few months ago, so this won't result in immediate savings. But when my annual escrow review happens in 2025, I should get a one-time rebate since I'm currently making payments based on my old premium, a lower monthly mortgage payment, or (ideally) both.
Tips to get the best deal on your homeowners insurance
By far, the number one way to (potentially) save money on homeowners insurance is to shop around. It's relatively easy to obtain quotes from the best home insurance companies, and you might be surprised at how much you can save. Yes, the switching process can be a bit of a hassle (you have to let your mortgage lender know, for example, since it's typically paid by escrow), but if you can save hundreds or even thousands of dollars per year on your insurance, it can be well worth it.
Another tip is to periodically review your coverage and deductibles. Now, it's never a good idea to skimp on coverage, but it can be a good idea to review your policy to make sure you aren't paying for too much. And if your deductible is relatively low, raising it to a higher (but still affordable) level can result in significant savings.
The bottom line
To be clear, I'm not saying that you should necessarily shop around for homeowners insurance every year when your policy is getting set to renew. But every so often, it can be worth the time it takes to get a couple of quotes to make sure the rate you're paying is appropriate for the coverage you need.
Our Research Expert
Matt is a Certified Financial Planner™ and investment advisor based in Columbia, South Carolina, and has been writing about personal finance since 2011.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.