The cost of home insurance is getting more expensive by the day. According to S&P Global Market Intelligence, home insurance premiums rose an average of 13% in 2024, with rates rising more than 20% in some states. As premiums continue to climb, many homeowners are starting to feel the financial strain. In addition to rising premiums, homeowners are facing challenges in securing affordable insurance coverage due to natural disasters and inflation. In some cases, residents in areas prone to natural disasters are now paying more for insurance and property taxes than their mortgage payments, leading to difficult decisions about maintaining coverage and protecting their largest asset.
This financial strain is particularly evident in states like Florida, where 20% of homeowners pay at least $4,000 per year in insurance premiums. The surge in costs is driven by inflation in building materials and a rise in weather and climate-related disasters, prompting insurers to raise rates and reduce coverage, especially in high-risk areas. While homeowners insurance premiums are on the rise, there are effective strategies to manage and even reduce these costs. By taking proactive steps, you can lift some of the financial burden without compromising your coverage. Here are four practical ways to lower your homeowners insurance premium in 2025.
1. Combine your policies
One of the most straightforward methods to save on your home insurance is to bundle it with other policies you might have, such as auto insurance. Many insurance companies offer significant discounts for customers who consolidate their policies under one provider. This tactic not only simplifies your billing process but also provides a substantial financial benefit. The amount of savings can vary depending on your insurer and location, but it is often worth the effort.
For instance, Liberty Mutual advertises that consumers can save up to $950 on home and auto insurance when bundling policies. State Farm offers discounts of up to $1,273 with bundling, while Progressive states that new customers save over 20% on average when they bundle their home and auto insurance with the company. Allstate advertises that consumers can save up to 25% on their bundled policies. Having all your policies with one insurer also provides the added benefit of streamlined customer service and claims processing, making it easier to manage.
2. Inquire about discounts
Many insurers offer various discounts, but they don’t always make them obvious to customers. To take full advantage of potential savings, you need to ask your insurer directly about the types of discounts available. Some common discounts include those for having a new roof, installing security systems, being a long-term customer, and even signing up for electronic billing. By exploring these options, you can save a substantial amount on your annual premiums.
Home security discounts, for example, reward homeowners who invest in systems designed to protect their property. Installing devices such as smoke detectors, fire alarms, and sprinkler systems not only enhances safety but may qualify you for additional savings with insurers like State Farm. Making your home more disaster-resistant can also lead to reduced premiums, especially in areas prone to natural disasters. Discounts are also available for retirees, as they are usually home more often and can respond quickly to emergencies, lessening the risk of severe loss.
3. Increase your deductible
Another effective way to lower your home insurance premium is by increasing your deductible. A deductible is the amount you pay out of pocket before your insurance coverage kicks in. Raising this amount can significantly reduce your annual premium because it reduces the insurer’s risk. However, it’s crucial to ensure you have enough in your savings to cover the higher deductible should you need to file a claim.
For example, the Insurance Information Institute estimates that raising your deductible from $500 to $1,000 can slash your premiums by up to 25%. Incrementally higher deductibles can lead to even greater savings. For instance, increasing your deductible from $500 to $2,500 might save you about $500 annually, but you’ll need to pay the first $2,500 of any claim. Ensure you have sufficient emergency funds to cover this higher amount. Otherwise, unexpected expenses could strain your finances. Remember that each claim requires you to pay the deductible, so multiple claims can quickly add up.
4. Enhance your credit score or sustain a high credit rating
Improving your credit score is more of a long-term strategy, but it is highly effective in reducing home insurance premiums. Insurers often use credit-based insurance scores to assess the risk of a policyholder. A higher credit score typically translates to lower insurance premiums because individuals with good credit are considered lower risk. To improve your credit score, focus on paying all your bills on time, maintaining a low credit utilization ratio, and regularly checking your credit report for errors.
Budgeting tools can be an immense help here. Apps like Quicken Simplifi let you customize spending plans, track expenses, set savings goals, and plan for future cash flows. For credit monitoring, services like myFICO can provide access to your FICO® credit scores and three-bureau credit monitoring, offering insights into your financial health. Alternatively, you might use identity theft protection services like LifeLock by Norton, which also offers credit monitoring.
Being proactive about your credit score not only benefits you when it comes to securing loans and managing credit cards but also significantly impacts your ability to get more favorable insurance rates. Regularly review and manage your financial habits to ensure you keep that high credit score, thereby ensuring you continue to receive the best possible rates on your home insurance policy.
Be Proactive with Your Coverage
The cost of home insurance is becoming increasingly expensive. According to S&P Global Market Intelligence, home insurance premiums went up an average of 13% in 2024, with certain states experiencing hikes of over 20%. This upward trend is putting financial pressure on many homeowners. Not only are premiums rising, but securing affordable insurance has also become tough due to natural disasters and inflation. In high-risk areas, some residents now pay more for insurance and property taxes than their mortgage, forcing difficult decisions about maintaining coverage and protecting their biggest asset.
This financial pressure is especially evident in states like Florida, where 20% of homeowners pay at least $4,000 annually for insurance. This cost surge is driven by inflation in building materials and a spike in weather and climate-related disasters, leading insurers to raise rates and cut coverage, particularly in high-risk zones. Despite rising premiums, there are strategies to manage and reduce these costs. By taking proactive measures, you can alleviate some financial strain without compromising your coverage. Here are four practical ways to lower your homeowners insurance premium in 2025.
