Your home is your fortress – an expensive one. You see it every month when you get your premium bill in the mail (or when you see the premium deducted by the insurer straight from your bank account). It sort of feels like the insurance company hooks up a vacuum to your wallet and doesn’t stop until everything’s gone.
With insurance premiums rising for most people, it’s a little disheartening to think that “expensive” is the new normal. In North Carolina, for example, insurance rates are rising 7 percent this year alone. Along the Gulf Coast, homeowners are being stranded in their homes because of rising premiums.
(Related – 25 ways to reduce your insurance premium)
Fortunately, it doesn’t have to be this way. If your premiums are rising, here are three easy ways to lower your monthly costs:
Combining Insurance Policies
If you haven’t consolidated your insurance policies yet, consider doing so. Many insurers are multi-line carriers. What this means is that they provide coverage for more than just one kind of insurance. For example, an insurer might sell homeowner’s insurance, life insurance, auto insurance, and even umbrella insurance.
You’ve probably been told to consolidate your coverages before, but you weren’t really sold on the idea – now’s the time to rethink that attitude. Insurers often offer discounts for combining all of your insurance policies under one roof. What’s more, if you have more than one driver in the house, you can also save money on your auto insurance by keeping all of your auto policies with one carrier – called a “multi-car discount.”
By combining insurance policies, the insurer receives more money than it otherwise would have. It’s not that the insurance policies suddenly got cheaper – it’s the insurer has more money to invest, so it charges a lower rate. It fully expects to make more money off of you than the discount it’s offering. But both you and the insurer win.
(Related – Tips for cheap home insurance)
Optimizing Insurance Costs
You may not realize it, but your agent probably added some riders to your homeowner’s insurance policy, and increased coverage on the base policy when you first took out the contract. For example, you might have mentioned to your agent that you have some jewelry.
Your agent probably thought you meant “expensive jewelry,” and added a special endorsement onto your policy – adding to your premium.
In many cases, insurers will cover you for up to $1,000 for jewelry on the base policy. If you really do have family jewels, or something insanely expensive, then by all means keep the rider. However, if your jewelry collection is modest, you might be able to ditch this rider and save yourself some money.
Other riders that you might not need include coverage for silverware (which is intended for rare, or family, heirlooms), artwork and antiques coverage, oriental rugs, home office equipment, and endorsements for hurricane coverage or other natural disasters when you live in a low-risk area.
For example, you would want earthquake coverage in California, but it wouldn’t make much sense if you lived in Wisconsin.
Take Advantage of Mutual Insurers
It’s not well advertised, but mutual insurers can save you more money than most public insurance companies. Mutual insurers are privately owned insurance companies – owned by the policyholders. That means when you buy coverage from a mutual insurer, you own part of the company.
Because of this, you may be entitled to dividend payments. Some mutual insurers do advertise the fact that they pay dividends on their policies. When shopping around, it’s important to ask about the impact of dividends on your premium. Don’t just go by the quote the agent gives you.
If your insurer pays an annual dividend, it can be applied directly to the policy’s premium – saving you money in a way that few other insurers can match. Note that dividends are never guaranteed. With that being said, many mutual insurers that do pay dividends, have an excellent track record of doing so every year.