home insurance discounts & savings
This chapter is devoted to specific ways you can save money on your
home insurance premiums without sacrificing the coverages you
need to protect your family and satisfy your mortgage lender.
DISCOUNTS
The most important technique you can use when looking for cheap
home insurance is to make sure you are taking advantage of all the
possible discounts and savings available. These discounts can
quickly add up, saving you hundreds of dollars or more per year. Here
are some of the discounts offered on home insurance policies.
MULTILINE DISCOUNT
The multiline discount is popular among home insurance
policyholders and is easy to obtain. If you already have auto
coverage with a company that offers home insurance, you can save
up to 15 percent on your auto insurance and home insurance
premiums by placing both policies with the same insurance company
or with affiliates of a single insurer. It is also to your advantage to
contact other companies that offer both types of policies; have any
company or agency that quotes your home insurance quote your auto
as well. You may find that another company can offer you a lower rate
on both policies.

SECURITY SYSTEM DISCOUNT
Most insurance companies also offer a discount if you have a security
system active on your property. If your home has a security system,
make sure you let your current insurance company, or any company
you obtain a quote from, know this information. Also, make sure you
have the paperwork available from the purchase and installation of
your security system so that you can show your home insurance
agent what type of system you have installed on your property. Some
companies may also ask for a copy of an alarm system certificate to
keep in their files. Be certain to keep your original certificate, so you
can readily provide it to the insurance company.
If you do not have a security system installed, ask your insurance
agent about a security system discount when you obtain your initial
home insurance quote. You may be able to offset the cost of
purchasing and installing a security system with your home insurance
savings. Not only will you be able to continue receiving the discount
on future policy terms, but you also will have the added benefit of
knowing that your home, your family, and your personal property are
protected from injury or loss due to vandalism, burglary, or theft.
SPRINKLER SYSTEM OR FIRE SUPPRESSANT DISCOUNT
A home insurer will frequently offer a discount if you have a sprinkler
system or fire suppressant system installed in your home. As with a
security system, you should have all the paperwork from the
purchase and installation of your fire suppressant system available so
that you can receive the discount if it is offered by your insurance
company.
AGE-BASED DISCOUNT
Some companies will give discounts for people 55 and older or retired
individuals. When you obtain a quote, be sure to check with your
agent or insurance company to see if your company offers this
discount.
PERSISTENCY DISCOUNT
Insurance companies also offer discounts for long-term customers
because it costs an insurance company far less money to retain the
business of current policyholders than to attract and earn the
business of new policyholders. You may have to hold a policy for a
few years with one company or group of insurer affiliates before you
are eligible to earn this discount, but it will provide you with added
savings in the long term. Because this discount can build over several
policy terms, it is advantageous to find an agent and company you
are happy with and keep your policy in force with the same company
for as long as possible.
CLAIMS-FREE DISCOUNT
Claims-free discounts are offered by many home insurers. If you have
kept your policy in force for more than one policy term and have
never had a claim on a home policy, you could qualify for this
discount. Ask about this discount when obtaining home insurance
quotes from agents and companies to see if this discount will be
available once you have completed a policy term without filing a
claim.
Some insurers will allow the claims-free discount to compound over
several policy terms. This means the longer you keep your home
insurance policy in force without filing a claim, the greater your
discount percentage will be.

To illustrate, here is an example of how a claims-free discount can
benefit you in the long term:
Let us suppose your initial policy premium is $1,000 per year, and
your home insurer offers a 5 percent claims-free discount for each
policy term during which you keep your policy in force without filing a
claim on your policy. After you complete your first policy term, you will
be eligible for a 5 percent discount, so the premium for your next term
will be $950.
After you have completed your second policy term without a claim,
your insurer will deduct another 5 percent, so your policy premium will
be 95 percent of the second term's premium, or $902.50.
If you continue your policy for another term claims-free, another 5
percent will be deducted, so your premium for the fourth term will be
95 percent of $902.50, or $857.38.
Not all home insurers that offer claims-free discounts will compound
this discount, so be sure to ask your agent before you start your
policy. As you can see, if your insurer allows this discount to accrue, it
can add up to significant savings over several policy terms.
FIRE DEPARTMENT DISCOUNT
You can also qualify for savings on your home policy if you live close
to the fire department or within city limits. Be sure to ask your agent if
your insurance company offers this discount when you obtain a quote
for home insurance coverage.
DEDUCTIBLES
Deductibles are another way to save a significant amount on your
home insurance premiums. If you choose a low deductible on your
policy, your insurer will charge a higher premium for two reasons:
First, if damage or a loss occurs, your insurer will be required to make
a higher payment on the claim; second, a lower deductible
encourages policyholders to submit frequent, small-value claims that
are costly for the insurance company to adjust and settle.
The higher the deductible you choose, the lower your premiums will
be. When applying for a home insurance policy, you should choose
the highest deductible you can manage without placing a strain on
your family's finances. It is important you consider your deductible
amount carefully because you will be responsible for that amount if
you incur a loss. If the amount of damage your home or personal
property incurs is less than the deductible, you will be responsible for
the entire amount of the loss, regardless of whether you submit a
claim to your insurance company.