Many homeowners choose to refinance their homes in hopes of saving money, though savings can vary based on a consumer’s credit profile, interest rate availability, and other factors. What many people may not realize is that reviewing their homeowners insurance policy during a refinance can also unlock additional savings. If you are thinking about refinancing or have recently started the process, consider these six tips to help you make the best decision when selecting the right homeowners insurance policy.
See if you could save on insurance
Tip 1: Run the numbers
Most people who purchase a home when rates are higher are eager to refinance when rates dip. When thinking about refinancing, it’s good to remember that your escrow account typically includes your homeowners insurance payment, and that you might be able to save money simply by adjusting your policy.
Homeowners sometimes forget that their insurance payments are paid through their escrow accounts. This is by design, as having insurance premiums paid automatically ensures that they are paid on time with no lapses in coverage. However, this convenience means that once a homeowner establishes insurance coverage, typically at closing, they tend to forget about it.
And that “set it and forget it” ease could mean that you are missing out on discounts. If you are going through the process of refinancing, reexamining your homeowners insurance policy is one more way to make sure you are saving the most money possible.
Tip 2: Make sure your insurance information is up to date
If you’re thinking about refinancing your mortgage, it’s a good time to take a close look at your homeowners insurance policy.
When you have a loan on your home, your lender will require you to carry homeowners insurance, and your premium is based on a variety of factors.
Some of these factors include things that don’t change, such as your address and the style and materials of your home’s construction.
Other factors used to calculate your premium can change over time. Perhaps you decided to install smart home features like leak detection systems or an upgraded security system. These types of improvements could save you money on your homeowners insurance, but only when the insurance company is notified of the changes.
Taking time to think about what you’ve updated, improved, or added to your home may help you save money on your premium.
Tip 3: Ask yourself—do you have the right coverage?
How has your life changed since you first got your mortgage? Maybe you furnished your home with hand-me-downs when you moved in, and over time have replaced those old pieces with new furniture. This can make a big difference in the amount and type of personal property coverage you need.
Perhaps the limited value of those inherited pieces led you to insure your belongings at an actual cash value (ACV) level, but now that you own new furniture, it would be wise to switch to replacement cost coverage.
If you’ve added substantially to your belongings, you might also want to revisit the amount of personal property coverage you have. For example, if you moved in as a couple but now have children, you’ve probably added quite a bit of additional furniture, clothing, sports equipment, and more.
Life changes, and your homeowners insurance policy should be adjusted to keep your property protected.
Tip 4: Reconsider your deductible
One important factor that impacts your premium cost is the level of your deductible. An insurance deductible is the amount for which you are responsible before your insurance coverage kicks in on a claim.
A lower deductible means that you are responsible for covering a lower amount if you ever need to make a claim, but it also means that your premium might be higher. Conversely, a higher deductible means you are responsible for more out of pocket when making a claim, but shouldering that extra expense usually means you’ll be rewarded with a lower premium.
Think carefully about how much you could realistically afford to pay out of pocket if you needed to file a claim. Increasing your deductible can yield savings on your premium, making it an attractive option.
Tip 5: Bundle up!
One of the best ways to save on insurance costs is to take advantage of bundling your policies.
Bundling is defined as consolidating multiple policies under a single carrier. It’s great for insurance companies, so they incentivize this behavior by offering discounts for policyholders who have multiple accounts with them.
Companies like it when you have multiple policies with them for the obvious reason that more policies mean more premiums, that’s true. But bundling can also mean less work for a policyholder if there’s ever a complex claim, such as a storm that damages both the house and a vehicle, for example, because it means one call to one insurer to file a claim, rather than multiple calls.
Not all insurance companies offer coverage for multiple lines. For instance, some companies only offer car insurance.
If you have a homeowners insurance policy and one or more vehicle policies, it might be worth it to see if bundling could save you money, even if it means changing insurers.
Tip 6: Shop around for the best rates
Once you’ve had a chance to think about some of the options noted above, it’s time to take that information and get some quotes for homeowners insurance!
You may be surprised at how much you could save when you compare. That’s because while many of the factors insurers consider to calculate your premium are similar, each insurance company uses its own proprietary formula to assess your risk. When similar factors are weighted differently, that can result in savings for you.
Getting a range of quotes is essential to finding out which company or companies can offer you the best deal on the coverage you need.
Contact the experts at Rate Insurance early in your refinancing process for help with finding the right policy to fit your family’s needs and your budget. With access to hundreds of insurers and policies, Rate can take the hassle out of searching for new homeowners insurance.
Ensure your home is protected
Disclaimer:
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate Insurance does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate Insurance. Rate Insurance, its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
