Six secret ways to save on homeowner's insurance!

"An insurance company is like a guy who sets your house on fire, then sells you a bucket of water." Anonymous

Homeowners insurance rates have risen 47% since 2020, and are one of the biggest expenses annually for any homeowner. The reasons for the rise vary, but they include higher home values, higher cost of construction materials, and more natural disasters due to climate change.

Any good insurance agent will tell you the main things you can alter to get a lower rate- deductibles- which can save money on the front end but cost dearly if something happens. And sure, you can compare quotes from different companies, but that can be confusing and time-consuming, with dozens of companies in the market that change prices all the time.

Here are some lesser known tips for saving $$$$ on homeowner insurance, based on my own experience and research.

1- Shop around regularly! Ideally once a year. Even if you don't end up switching, shopping around online can actually prevent bigger increases in premiums. Thanks to AI and price optimization algorithms, insurance companies can tell who the bargain hunters are and who will pay almost any price that's given them.

Insurance companies know when you've shopped around. Networks of agencies share with each other and are alerted when an insurance premium quote is requested. They know that the person doing the requesting is looking around and price sensitive, so they are more cautious about premium increases.

Alternatively, those who have a mortgage payment that includes insurance are less likely to be aware of price changes and shop around. Those shoppers who stick with the same company and agent forever should be given loyal customer discounts, but the opposite is true. They're penalized because the algorithm predicts they are likely to absorb higher costs and not shop around.

2- Get an alarm system. Stay ahead of possible claims for theft and home damage by preventing them entirely. Most companies offer a discount for wireless home security systems and even for Ring doorbell cameras.

3- Beware of dogs (and other dangerous animals). Rottweilers, pit bulls, German shepherds, and other aggressive dog breeds are a red flag for insurance companies, as are exotic pets. Large reptiles, monkeys, apes, skunks, and hedgehogs are included in policy exclusions by many.

4- Improve your credit score. Many businesses that serve homeowners look at credit scores to judge how reliable they are in paying bills. Insurance companies are no different, and they will charge substantially higher premiums (72% higher by one estimate) for clients with a low credit score versus one with a higher credit score. This is to account for their perceived risk, even if someone has never been late on a mortgage payment.

Currently, four states prohibit companies from using your credit score for home insurance (California, Hawaii, Massachusetts, and Michigan), but for the other 46 it's common. Credit scores can be obtained in multiple places online, and everyone should be aware of them when taking out a loan or insurance policy.

5- Improve your CLUE rating. The Comprehensive Loss Underwriting Exchange (CLUE) is a database that insurers know well but few consumers do. It keeps track of all claims made on a property, even if by different insurance companies. It also tracks claims on any property from previous owners. As most of us know, repeated claims point to possible structural problems with any building. Be aware that each address comes with this list, and rates can go up if problems are flagged. To get a CLUE report on your home, go to Lexus Nexis.

6- Look for risks outside your home, because the satellites see everything. Do you have a tree right next to your house, or a tree limb overhanging it? Insurance companies can see that on satellite photos and raise your risk rating because of it. Does your roof have moss on it? Moss may look nice, but it degrades shingles and could raise premiums. Other dangers like swimming pools, trampolines, abandoned cars, or treehouses could tip a company off to added risks even if left off the insurance application. And if they find out you've lied about anything, they can drop your coverage in a second.

Insurance companies can examine the exterior of any home thanks to satellite imagery, and the best way to thwart them is to remove the dangers. Cut back tree limbs, clean up the roof and the yard to make it look well-maintained.

I used to think that insurance was a lose/lose proposition. I lose money right away, and lose even more if I have to use the insurance. But the best way to save on insurance is to not need it- to have few if any claims because you took good care of your home, car, and body. Disasters can still strike, but taking reasonable precautions makes them less devastating.

With the advance of climate change, any number of disasters threaten homes- wind damage, floods, fires, hail, or heat. Companies will have no choice but to keep raising rates. We all need to work with them to lower the risks in the first place while saving money and possibly lives at the same time.

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