Quick Answer
Homeowners can lower insurance costs by raising deductibles, bundling policies, and improving home security. The average annual homeowners insurance premium was $1,411 in 2021, according to the Insurance Information Institute, but targeted strategies can reduce your bill by hundreds of dollars a year depending on your insurer and risk profile.
Updated August 2026
Home insurance premiums climbed again in 2021, with the national average rising 7.6% to $1,411 per year, according to the Insurance Information Institute. That steady upward trend has made cost-reduction strategies a priority for homeowners who see their bills rise even when nothing about their property or coverage has changed. Even proactive shoppers may find their agent hasn’t surfaced every available option. And there’s no overnight fix. At best, insurers reward clients who take reasonable steps to protect their homes. At worst, they find other reasons to raise rates anyway. Here are ten specific ways to cut costs without giving up meaningful protection.
Key Takeaways
- Raising your deductible from $500 to $1,000 can reduce your annual premium by up to 25%, according to the Insurance Information Institute.
- Bundling your home and auto policies with the same insurer can save you 5% to 25% on your combined premiums, per Consumer Reports.
- Installing a monitored home security system can earn you a discount of up to 20% on your homeowners policy, according to NerdWallet.
- Your FICO Score directly influences your insurance premium in most states, homeowners with poor credit can pay up to 91% more than those with excellent credit, per Experian.
- Homes built within the last 10 years or recently renovated may qualify for new-construction or updated-systems discounts that reduce premiums by 10% to 15%, according to Policygenius.
- Loyal customers who stay with the same insurer for 3 to 5 years may qualify for renewal discounts, according to Bankrate.
| Cost-Reduction Strategy | Estimated Annual Savings | Effort Level | Time to Take Effect |
|---|---|---|---|
| Raise deductible ($500 to $1,000) | $150 – $400 | Low | Immediate at renewal |
| Bundle home and auto policies | $200 – $600 | Low | Immediate at renewal |
| Install monitored security system | $100 – $300 | Medium | 30 – 60 days after installation |
| Improve credit score (Fair to Good) | $300 – $900 | High | 6 – 18 months |
| New construction or major renovation discount | $100 – $350 | Medium | At policy application or renewal |
| Loyalty/long-term customer discount | $75 – $200 | Low | After 3 – 5 years with insurer |
| Add smoke detectors and deadbolts | $50 – $150 | Low | 30 days after documentation |
| Review and remove unused scheduled items | $50 – $250 | Low | Immediate at next review |
1. Raise your Deductible
One of the most common ways to save on your home insurance is to raise your deductible. According to the Insurance Information Institute, increasing your deductible from $500 to $1,000 can cut your premium by as much as 25%. The catch is straightforward: you will be responsible for that deductible amount before your insurer covers anything. Suppose a fire causes significant damage to your home, you pay that first $1,000 out of pocket. Before committing to a higher deductible, make sure that amount is sitting in an accessible savings account, such as a high-yield account through Ally Bank or Marcus by Goldman Sachs. This strategy is not a good fit for homeowners who are living close to their monthly budget and could not absorb a large unexpected expense. If you have a 620 FICO score and a $25,000 mortgage with a tight monthly budget, raising your deductible might still be worth it only if your new rate drops by at least 15%, a threshold that ensures the savings outweigh the risk of a cash shortfall during a claim.
2. Insure for Replacement Cost, not Market Value
There is an important difference between the market value of your home and its replacement cost. Market value reflects what a buyer would pay today; replacement cost is what it would actually take 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. Construction costs have risen sharply, so a policy pegged to market value could leave you with a significant out-of-pocket gap after a total loss. Ask your agent to run a replacement cost estimate and confirm your dwelling coverage matches it. If you’re renovating your kitchen and the work will cost $40,000, insure for replacement cost, especially if your home is over 15 years old, because the cost to rebuild your home will likely exceed its market value by at least 25%.
3. Package your Home & Auto Policies Together
Owning both a home and a car creates an easy opportunity: bundle both policies with the same insurer. Major carriers including State Farm, Allstate, and USAA offer multi-policy discounts that can range from 5% to 25% off 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. If you have a $22,000 car loan and a $300,000 home, always compare quotes from at least three insurers before bundling. A bundle is usually worth it only if the combined premium is at least 10% lower than the sum of two separate policies.
- Newer/Updated Homes May Be Eligible for Discounts
Recent construction and updated systems, a new roof, upgraded electrical panel, or modern plumbing, are generally viewed by insurers 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. After completing significant upgrades, document the work thoroughly and notify your insurer so they can apply any applicable discounts at the next renewal. If you just finished a $28,000 roof replacement and your insurer offers a 12% discount, the annual savings could be $240, making the upgrade a smart financial move even before considering improved safety and comfort.
- Improve your Home Security
A monitored security system is worth considering for homes in higher-risk areas. 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 a discount of up to 20% on your homeowners premium. Even basic protective devices like deadbolt locks and smoke detectors can qualify for a discount of at least 5%, according to the Insurance Information Institute. 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 so you know exactly what documentation to provide. If you’re upgrading your home’s security for $900, it’s usually worth the cost only if the annual savings exceed $150, otherwise, the payback period exceeds five years, which may not justify the upfront investment.
Beyond the premium discount, a monitored system also reduces your likelihood of filing a claim at all. According to the Insurance Information Institute, only about 5.3% of insured homes filed a claim in 2021, so a clean claims history is one of the most consistent long-term drivers of lower insurance costs. Prevention compounds over time in ways a one-time discount does not.
- Maintain a Good Credit Record
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 gap is large enough to dwarf most other discounts on this list. Paying all your bills on time, keeping credit card balances low, and avoiding unnecessary new credit inquiries are the main levers. You can monitor your credit for free through Experian, Equifax, or via AnnualCreditReport.com. Improving your credit profile takes time, but the long-term premium savings are substantial. If you have a 620 FICO score and a $50,000 student loan, it’s worth investing in credit improvement only if your new rate falls by at least 15%, a threshold that ensures the effort and time are justified by tangible savings.
- Stay with the Same Insurer
Long-term customers frequently earn renewal discounts without realizing it. According to Bankrate, many carriers offer loyalty discounts for customers who have maintained continuous coverage for three to five years or more. Loyalty has real value, but it should not prevent you from shopping around every two to three years to confirm your current rate is still competitive. A competing quote from another carrier can often be brought back to your existing insurer as a negotiating tool. If you’ve been with the same insurer for four years and your renewal quote shows a 10% rate increase, it’s worth asking for a loyalty discount, especially if your current premium is already above the 75th percentile for your ZIP code.
- Buy a Longer Policy
Committing to pay your full annual premium upfront, rather than in monthly installments, can save an additional 3% to 5%, according to industry data reviewed by ValuePenguin. A longer relationship with the same carrier also tends to position you for better renewal terms over time. The longer your continuous coverage history, the less likely you are to face rate increases tied to short tenures or gaps in coverage. If you can afford to pay $1,400 in one lump sum instead of $120 monthly, the $70 to $100 saved annually may still be worth it, especially if you’re planning to stay in the home for at least five years.
- Reduce your Auto Coverage to Comprehensive Only During Winter Months
For older vehicles that sit unused during winter, temporarily reducing coverage to comprehensive only, dropping collision while the car is not in regular use, 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 that reducing coverage does not violate the terms of your financing agreement, as most lenders require full coverage on financed vehicles. This approach only makes sense for older, paid-off cars; it is not appropriate for a vehicle you rely on daily or one that still carries a loan. If your $10,000 car is parked for five months and your collision premium is $120 annually, dropping it for that period saves $50, making the trade-off reasonable only if you’re not planning to drive it during those months.
- Review the Value of your Scheduled Items and Rec Vehicles at Least Once a Year
A high-value items rider or scheduled personal property endorsement, covering jewelry, fine art, collectibles, or musical instruments, should be reviewed at least once a year. Items that have depreciated in value may be over-insured, meaning you are paying premiums for coverage you no longer 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 an annual home inventory review to keep your coverage aligned with the actual current value of your possessions. If you have a $12,000 vintage watch that’s now worth $8,000, reducing the scheduled value could save $60 annually, making the update worthwhile.
Frequently Asked Questions
What is the fastest way to lower my homeowners insurance premium?
Raising your deductible is the quickest option. Increasing it from $500 to $1,000 can reduce your annual premium by up to 25%, according to the Insurance Information Institute, 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 call to your insurer.
How much can I save by bundling home and auto insurance?
Bundling with the same carrier typically saves homeowners between 5% and 25% on combined premiums. The exact discount varies by insurer. Major carriers including State Farm, Allstate, and Nationwide all offer multi-policy discounts, so compare bundled quotes from at least two or three companies before committing. A bundle is usually worth it only if the combined rate is at least 10% lower than the sum of separate policies.
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. Even basic upgrades like deadbolt locks and smoke detectors can earn a discount of at least 5%, according to the Insurance Information Institute. Deadbolt locks, smoke detectors, carbon monoxide detectors, fire extinguishers, and water leak sensors can each qualify for smaller incremental discounts on top of that. Ask your insurer for a complete list of qualifying safety features before making purchases, since discount amounts vary by carrier and some require third-party monitoring to apply. A $900 security system is worth it only if the resulting discount exceeds $150 annually.
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?
A higher deductible means you agree to cover more out of pocket before your insurance pays, which reduces the insurer’s financial exposure. In exchange, they lower your annual premium. Going from a $500 to a $1,000 deductible can save up to 25% per year, according to the Insurance Information Institute. Make sure you have the full deductible amount in accessible savings before making the change, this strategy backfires for homeowners who cannot absorb the upfront cost of a mid-year loss.
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 is often more cost-effective to pay out of pocket rather than file a claim and risk a lasting rate increase.
How often should I shop around for homeowners insurance?
Financial experts and consumer advocates generally recommend comparing quotes every two to three years, or whenever you experience a major life event such as a renovation, marriage, or significant new purchase. The NAIC and Bankrate both note that even loyal customers can find meaningful savings by periodically checking competing carriers, and a competing quote can sometimes be used to negotiate a better rate with your current insurer.
Can a new roof lower my homeowners insurance?
Yes. A new roof is one of the most impactful structural upgrades for reducing your homeowners insurance premium. Depending on the material and your insurer, it 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 the 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 covers 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. Owners of items worth more than those caps will find a scheduled endorsement provides fuller protection, though it does add to your premium. Review the declared values annually; paying to insure an item at a value it no longer holds is a straightforward waste of premium dollars.
