How to save on home insurance

Consider shopping around, raising the deductible, and making your home more secure.

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Key takeaways

  • Shop around for coverage.
  • Raise your deductible.
  • Consider bundling your home, liability, and auto insurance.
  • Beef up your home’s security and disaster resistance.

When you own a home, the costs go far beyond your mortgage and real estate taxes. One significant expense is home insurance, which mortgage lenders generally require. The good news: With a little effort there are ways to trim that cost, freeing up money for other goals—like saving for the future, a child's education, or your next vacation.

Here are 4 tips to consider.

Shop around

The price of your home insurance can vary significantly among insurance companies. Every insurer assesses risk and calculates premiums differently.

Things like your home's age and type of construction, location, fire and theft protection, neighborhood crime, pets, swimming pools, credit, and claims history are weighted differently by different companies—and all factor into the price you pay. Taking time to shop around could save you a lot of money.

Is it actually worth the time to shop around?

Getting quotes on home insurance can be a little tedious—there are a lot of questions and it may take some time. But, depending on where you live and the specifics of your home and financial situation, the savings can be significant. In our analysis for a sample home, there could be as much as a 182% difference between the highest and lowest quotes.

To find out how widely quotes on home insurance could differ, Fidelity compared quotes to insure a single-family home by brokers, available online across 6 different locations in the United States. As you can see in the table below, the difference between high and low bids topped 100% in 3 of the 6 regions, with potential yearly savings as high as $1,740.

Savings on home insurance across the country
Location Difference between the lowest and highest quotes (in %) Maximum amount of yearly savings possible
Newton, MA 62.1% $768
Houston, TX 182.8% $1,740
Margate, FL 9.4% $207
Santa Monica, CA 116.0% $870
Seattle, WA 161.2% $896
Parker, CO 40.3% $577
Quotes were collected for the most common type of policy (HO3) with $450,000 full replacement coverage, $3,000 medical coverage, $300,000 in liability coverage, and a $1,000 deductible as of  November 2016.

Consider reviewing your home insurance quotes at least once a year and after making any major home renovation. After getting quotes from different insurance providers, go through online reviews and ratings to choose the provider that offers the coverage and customer service you need. Online comparison sites and insurance brokers are a great starting point, but the cheapest deal available might not give you the right coverage. So you’ll want to make sure you read the fine print and talk to an agent before making a change.

Raise your deductible

A deductible is the amount of money you have to pay toward a loss before your insurance kicks in to pay a claim. The higher your deductible, the more money you can save on your premiums. Most insurance policies these days carry a deductible of at least $500. Bumping that up to $2,500 could reduce your premium by an average of 16%, according to our analysis. Before raising your deductible, make sure you are comfortable covering the potential loss.

Monthly premiums for a $450,000 single-family home in Newton, MA
Deductible Amica Electric Insurance Geico Liberty Mutual Progressive
$500 $181 $149 $133 $160 $112
$1,000
(average savings of 8% over lowest deductible)
$167 $128 $122 $155 $103
$2,500
(average savings of 16% over lowest deductible)
$143 $117 $114 $145 $97
Quotes were collected for the most common type of policy (HO3) with $450,000 full replacement coverage, $3,000 medical coverage, and $300,000 in liability coverage as of  November 2016.

Another benefit of raising your deductible is that it may discourage you from making small claims, which can result in an increase in premiums or even nonrenewal of policies.

Try bundling

Some companies that sell homeowners, auto, and liability coverage will offer you discounts on your premium if you buy 2 or more policies from them. Apart from saving money on your premium, bundling is also more convenient with a single payment, single contract, and only one renewal every year. But make certain this combined price is lower than buying the different coverages from different companies.

Improve your home security and disaster resistance

Installing smoke detectors, a burglar alarm, or dead-bolt locks can help you save money. Home security monitoring devices that connect to the fire and police departments can get you an additional discount. Based on the insurance quotes that Fidelity gathered, insurance providers offer discounts of 5% to 10% on insurance premiums if you have a professionally monitored security system. But, before you buy, weigh how much a security system would cost and how much you would save on insurance premiums.

Another way to potentially lower the cost of your home insurance is by making your home more disaster resistant. You may be able to save on your premiums by adding storm shutters, reinforcing your roof, or buying stronger roofing materials. Modernizing your heating, plumbing, and electrical systems to reduce the risk of fire and water damage could help you save as well, but would obviously be a significant investment.

Who doesn't want extra money?

When it comes to things like home insurance, there's no reason to pay more than you have to. The extra money could be going into your retirement account or saving for an emergency. If you need to get out of debt, the cash could go to paying down balances. Investing a little bit of time into shopping around for insurance quotes could help you save over the long term.

Next steps to consider

Set priorities, determine your goals, and build your financial plan.

Answer 9 questions to get a financial wellness plan.

Weigh the pros and cons—it's not always just about money.

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Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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