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7 Homeowners Insurance Discounts Your Agent Won't Tell You About

Homeowners Insurance Discounts

With the average annual premium for homeowner's insurance costing between $300 and $1,000 according to the Federal Reserve Bureau, there are plenty of reasons to look for discounts. Especially for homeowners in such hurricane-prone states as Louisiana and Florida where premiums are the among the highest.

Raising the deductible and staying with the same insurer are common ways to lower insurance expenses, but there are others that most people don't know about -- or don't learn about until after a disaster hits their home.

Like bargaining with an auto dealer or going to a furniture store and trying to haggle for a lower price, you often won't get home insurance discounts unless you ask for them. That's why it pays to shop around, especially with a list of questions on the type of discounts insurers offer.

Not all home insurance companies offer the same discounts, so it's worth it to shop around. If getting a discount requires fixing your home -- such as getting a new roof -- you may not get it until the work is completed.

Discounts can range from as little as 2% or so up to 20% or more. If you're going to stay in your home for years to come, paying for some home improvements now may be worth it in the long run for an insurance discount.

Here are some home insurance discounts worth asking about:

1. Security Discount.

"From installing adequate locks to hiring a team to install alarms throughout your house, preventing home break-ins can lead to a savings of 2% to 5%," says Bill McGarry, a property manager for private homes in Palm Beach County in Florida. McGarry recommends using locks made by a brand name, such as Schlage, and having three locks per door.

2. Home Safety Discount.

Keeping your home secure is one thing, but keeping it safe from accidents is another. Carbon monoxide and smoke detectors can be installed rather inexpensively to help prevent accidents that could damage the home and require an insurance claim.

Other safety repairs that could lead to a discount include sprinkler systems, fire extinguishers, handrails alongside stairs, updated wiring systems for multiple appliances, well-grounded outside antenna, a fence with a locked gate around a backyard pool and maintained sidewalks outside that are free of large cracks or holes that someone can trip on.

If your home is near a fire station or you have a hydrant nearby, ask for a discount.

3. Home Improvement Discount.

A new roof, hurricane shutters and new washing machine hoses are among the fixes that can be done to homes to make them less likely to be damaged. While a new roof is expensive, others can be done inexpensively.

"They sound small, but if you add all of them up, it becomes a dramatic drop in your insurance costs," said McGarry, who works with a real estate company on home repairs and previously worked as a home inspector for 20 years.

Not having hurricane shutters and impact windows in hurricane-prone South Florida can result in higher insurance premiums, so getting them is worth the cost, McGarry said. The shutters are the best protection and can potentially take 8% to 10% in savings off your insurance premiums. They start at about $1,500 for a house and cost about $3,500 for a 2,000-square-foot house, depending on the number of openings. 

For about $20, a no-burst washing machine hose can replace the regular hose that comes with a washing machine, eliminating the worry about flooding if a hose breaks, said Elisa Bernick, associate editor at The Family Handyman. No-burst hoses can also be used for toilets and faucets.

"Burst washing machine hoses are at the top of the list for causing major home damage," Bernick said.

4. New Home Discount.

If your home was built within the past decade, some insurers will give a discount because everything should be new and in good enough shape to prevent an accident. You may also get a discount if the home was recently renovated.

5. Insured to Value Discount.

Rather than insuring your home for its market value or selling price, insuring up to 100% of the cost to replace your home can often save you money in premiums, especially if your home's value is much higher than what you bought it for.

6. The Claims-Free Discount.

If you're a new customer with a loss-free record for three years, you may get a discount. Sometimes called the "Claims-Free Discount," it sometimes first requires five years of no losses after buying a new policy.

7. Inflation Protection Discount.

If you adjust the amount of insurance to keep up with inflation, you may pay a little more in premiums for the peace of mind that your home and your belongings will be fully recovered without depreciation. Even with the higher premiums, you may be rewarded by getting more insurance protection bang for your premium bucks (i.e. more protection at a lower rate).

Shop around and ask questions. Sometimes you have to be a pest and ask your insurance agent questions. Unless you have to file a claim, you probably only talk to your agent once a year, so you might as well make it a worthwhile discussion and get help figuring out which discounts your home qualifies for. It also doesn't hurt to compare what you're paying to the average in your state (search "average homeowners insurance rates by state") to see how your premiums stack up.

And if none of your ideas are ringing any bells, ask the agent for suggestions on what you can do to qualify for discounts they offer. Remember: just an hour or less of research could save you hundreds of dollars every year -- well worth it!

More Ideas to Help You Reach Financial Independence: 

1. Pay off your mortgage to free up an extra $1,000 to $2,000 every month. Check out 3 Ways to Pay Off Your Mortgage 15 Years Early. 

2. Shrink and eliminate your car payments. If you're paying 6% APR or more, it's time to know The Top 3 Reasons to Refinance Your Auto Loan.
 

Aaron Crowe is a freelance journalist in the San Francisco Bay Area who specializes in personal finance. Follow him on Twitter at @aaroncrowe.