How to Lower Homeowners Insurance Costs

Are you looking to save money on your home insurance? You are not the only one. Indeed with insurance rates rising time after time, a large number of people find ways to lower their insurance premiums. According to the Insurance Information Institute’s 2025 data, homeowners insurance premiums have increased in nearly every state over the past three years, making cost-reduction strategies more important than ever. Even if you are active about locking down the discounts and rates you can get, there is always a chance that your agent is not presenting every available option. And as much as you will want to believe it, there is no such thing as magic that can drop your premiums overnight. At best, insurance companies will reduce your premiums for being a good client and taking reasonable steps to protect your home. At worst, they’ll cite something else entirely and raise your rates. Here are a few tips to help you cut costs on your home insurance without sacrificing coverage or too much peace of mind.

1. Raise your Deductible

One of the most common ways to save on your home insurance is to raise your deductible. By doing so, you can lower your premium by a significant measure. According to the Insurance Information Institute, increasing your deductible from $500 to $1,000 can cut your premium by as much as 25%. Still, it’s essential to keep in mind that you will still be required to pay for the damage or loss of property that falls within your deductible amount. So, suppose you have a $1,000 deductible and a fire causes significant damage to your home — you will be responsible for that first $1,000 before your insurer covers the rest. Make sure you have that amount set aside in an accessible savings account, such as a high-yield savings account through an institution like Ally Bank or Marcus by Goldman Sachs, before committing to a higher deductible.

2. Insure for Replacement Cost, not Market Value

It’s not as complicated as it sounds. There is an important difference between the market value of your home — what a buyer would pay for it today — and its replacement cost, which is what it would actually cost to rebuild the structure from the ground up using current labor and materials. The National Association of Insurance Commissioners (NAIC) recommends that homeowners insure their property at full replacement cost to avoid being underinsured after a major loss. If your home is insured at market value and construction costs have risen — which they have significantly since 2022 — you could face a large out-of-pocket gap after a total loss. Ask your agent to run a replacement cost estimate and make sure your dwelling coverage reflects it accurately.

3. Package your Home & Auto Policies Together

If you own a home and an automobile, you can save money by bundling both policies with the same insurer. This is especially true if you drive an older vehicle worth less than what it would cost to replace it. Major carriers including State Farm, Allstate, and USAA all offer multi-policy discounts that can range from 5% to 25% off your combined premiums, according to Consumer Reports. Before bundling, compare the total cost of your two policies separately against the bundled rate to confirm you are actually coming out ahead. In some cases, a standalone home insurance policy from a specialty carrier can be cheaper even after accounting for the bundling discount.

4. Newer/Updated Homes May Be Eligible for Discounts

If you’ve recently moved into a new home or completed major renovations, you may be eligible for discounts on your insurance. Insurers typically view newer construction and updated systems — such as a new roof, updated electrical panel, or modern plumbing — as lower-risk, which translates into lower premiums. According to Policygenius, homes built or fully renovated within the last 10 years can qualify for discounts of 10% to 15% with many major carriers. If you’ve made significant upgrades to your home, be sure to document them and notify your insurer so they can apply any applicable discounts to your policy at the next renewal.

5. Improve your Home Security

If your home is located in a higher-risk area, consider installing a monitored security system. Insurers reward homeowners who take steps to reduce the likelihood of a theft or fire claim. According to NerdWallet, a professionally monitored alarm system can earn you a discount of up to 20% on your homeowners premium. In addition, basic protective devices such as deadbolt locks, smoke detectors, and carbon monoxide detectors can each generate smaller incremental discounts. Many insurers, including Liberty Mutual and Farmers Insurance, have formalized discount schedules for these features — ask your agent for the full list of qualifying safety upgrades before your next renewal.

6. Maintain a Good Credit Record

Failing to maintain a good credit record will affect your ability to buy insurance and the rates you are offered. In most states, insurers use a credit-based insurance score — derived in part from your FICO Score — to help determine your premium. According to Experian, homeowners with poor credit can pay up to 91% more for homeowners insurance than those with excellent credit. That means paying all your bills on time, keeping your credit utilization low, and avoiding unnecessary new credit inquiries. You can monitor your credit for free through tools offered by Experian, Equifax, or via AnnualCreditReport.com. Improving your credit profile takes time, but the long-term premium savings are substantial.

7. Stay with the Same Insurer

If you have been with the same insurer for several years, you may already be earning a loyalty discount without realizing it. According to Bankrate, many carriers offer renewal discounts of 5% to 10% for customers who have maintained continuous coverage for three to five years or more. That said, loyalty should not prevent you from shopping around every two to three years to make sure your current rate is still competitive. If you find a better rate elsewhere, you can often bring that competing quote to your existing insurer and ask them to match it. If an insurer declines to offer or renew your policy due to your claims history, the NAIC recommends consulting your state’s department of insurance for assistance finding coverage through assigned risk pools or state fair access programs.

8. Buy a Longer Policy

If you are shopping for insurance and are in a position to commit to a longer policy term, doing so may result in lower premiums. Some insurers offer modest discounts for policyholders who pay their full annual premium upfront rather than in monthly installments, which can save an additional 3% to 5% according to industry data reviewed by ValuePenguin. Additionally, a longer relationship with the same carrier generally positions you for better renewal terms over time. The longer your continuous coverage history, the less likely you are to be subject to rate increases tied to short tenures or gaps in coverage.

9. Reduce your Auto Coverage to Comprehensive Only During Winter Months

During the winter months, your car is more likely to be damaged by snow, ice, and road hazards than during other seasons. If you have an older vehicle that is stored or rarely driven during winter, consider temporarily reducing your coverage to comprehensive only — dropping collision coverage while the vehicle is not in regular use. This is a recognized cost-reduction strategy noted by Progressive for owners of seasonal or low-use vehicles. Before making this change, confirm with your lender (if you have a car loan) that reducing coverage does not violate the terms of your financing agreement, as most lenders require full coverage on financed vehicles.

10. Review the Value of your Scheduled Items and Rec Vehicles at Least Once a Year

If you have a high-value items rider or scheduled personal property endorsement on your homeowners policy — covering things like jewelry, fine art, collectibles, or musical instruments — you should review the declared values at least once a year. Items that have depreciated in value may be over-insured, meaning you are paying premiums for coverage you do not need. Conversely, items that have appreciated should be reappraised and updated to avoid being underinsured. Recreational vehicles such as ATVs, golf carts, and watercraft also tend to depreciate over time. The Insurance Information Institute recommends conducting an annual home inventory review to keep your coverage aligned with the actual current value of your possessions.

Frequently Asked Questions

What is the fastest way to lower my homeowners insurance premium?

The fastest way to lower your premium is to raise your deductible. Increasing it from $500 to $1,000 can reduce your annual premium by up to 25% and typically takes effect at your next renewal or policy change date. Bundling your home and auto policies is a close second and can be arranged with a single phone call to your insurer.

How much can I save by bundling home and auto insurance?

Bundling home and auto insurance with the same carrier typically saves homeowners between 5% and 25% on their combined premiums. The exact discount varies by insurer. Major carriers including State Farm, Allstate, and Nationwide all offer multi-policy discounts, so it is worth comparing bundled quotes from at least two or three companies before committing.

Does my credit score affect my homeowners insurance rate?

Yes, in most states insurers use a credit-based insurance score derived from your credit history — including your FICO Score — to help set your premium. Homeowners with poor credit can pay up to 91% more than those with excellent credit, according to Experian. California, Maryland, and Massachusetts are among the states that prohibit the use of credit in insurance pricing.

What home security upgrades qualify for insurance discounts?

Professionally monitored alarm systems typically earn the largest discount — up to 20% with many insurers. Deadbolt locks, smoke detectors, carbon monoxide detectors, fire extinguishers, and water leak sensors can each qualify for smaller incremental discounts. Ask your insurer for a complete list of qualifying safety features before making purchases, as discount amounts vary by carrier.

Is it better to insure my home for replacement cost or market value?

Replacement cost coverage is almost always the better choice. Market value includes the land your home sits on and fluctuates with real estate trends, while replacement cost reflects the actual expense of rebuilding your home’s structure with current materials and labor. The NAIC recommends replacement cost coverage to prevent being underinsured after a major loss.

How does raising my deductible save money on homeowners insurance?

When you raise your deductible, you agree to pay more out of pocket before your insurance kicks in, which reduces the insurer’s financial exposure. In exchange, the insurer lowers your annual premium. Going from a $500 to a $1,000 deductible can save up to 25% per year. Just make sure you have the deductible amount accessible in savings before making the change.

Will filing a homeowners insurance claim raise my rates?

Filing a claim — particularly for smaller losses — can result in a premium increase at renewal or even non-renewal in some cases. Most insurers track claims through the CLUE (Comprehensive Loss Underwriting Exchange) database maintained by LexisNexis, which stores up to seven years of claims history. For minor repairs, it may be more cost-effective to pay out of pocket rather than file a claim and risk a rate increase.

How often should I shop around for homeowners insurance?

Financial experts and consumer advocates generally recommend comparing homeowners insurance quotes every two to three years, or whenever you experience a major life event such as a renovation, marriage, or new purchase. The NAIC and Bankrate both suggest that even loyal customers can find meaningful savings by periodically shopping competing carriers.

Can a new roof lower my homeowners insurance?

Yes. A new roof is one of the most impactful structural upgrades you can make to reduce your homeowners insurance premium. Depending on the material and your insurer, a new roof can reduce your premium by 10% to 40%. Impact-resistant roofing materials may qualify for additional credits in hail-prone states. Notify your insurer as soon as your new roof is installed and provide documentation of the material and installation date.

What is a scheduled personal property endorsement and should I have one?

A scheduled personal property endorsement — sometimes called a floater — is an add-on to your homeowners policy that provides coverage for specific high-value items such as jewelry, art, collectibles, or cameras at their appraised or agreed value. Standard homeowners policies cap coverage for these categories at $1,500 to $2,500. If you own items worth more than those caps, a scheduled endorsement provides fuller protection, though it does add to your premium. Review the declared values annually to avoid paying for coverage you no longer need.