How Often Should I Shop Around for Homeowners Insurance?

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Homeowners insurance is an important policy to have in place because it can give you financial recourse if your home or property is damaged, stolen or destroyed. Many homeowners decide on a policy, factor it into their monthly budget and forget about it.

But even if you shopped around to get the best deal when you first purchased your house, it doesn't mean your company still offers the best price. Here's why you should re-shop your policy every year or two.

Factors That Determine Homeowners Insurance Rates

Homeowners insurance carriers consider several different factors when calculating your policy premium, and it's possible for some of these factors to change over time. What's more, insurers may reevaluate how they view them when determining rates.

While factors can vary from insurer to insurer, here are some of the more common considerations that go into your policy premium calculation:

  • Location
  • Replacement cost of the home
  • Deductible
  • The home's age and condition
  • Security and safety features
  • Claims history
  • Your credit history (in states where it's allowed)
  • Condition of the roof
  • Home renovations and remodeling projects
  • The presence of a swimming pool or trampoline

How Often Can You Re-Shop Homeowners Insurance?

There's no set amount of time that you have to hold on to your original homeowners insurance policy. You can even cancel it in the middle of the year if you've found something better, although some carriers may charge a small fee for early cancellation.

In particular, though, you may want to consider re-shopping your homeowners insurance policy every year or two, particularly if your premium increases. If you pay your home insurance as part of your mortgage, your mortgage payment could also rise because of premium increases.

That said, your mortgage payment may include your principal and interest payment, homeowners insurance and property taxes, so you'll want to dig into your payment to find out which component caused the increase.

Even if your insurance premium hasn't gone up, it may make sense to re-shop your coverage if your insurance company doesn't plan to renew your policy, the company is making changes to your coverage or you don't have enough coverage based on the value of the home.

How to Shop for Homeowners Insurance

When shopping around for homeowners insurance, it's important to cast a wide net. The more companies you can compare, the better, and that includes both large and small carriers.

Of course, this can be extremely time-consuming if you're submitting an application with each individual company. A good way to save time is to work with an insurance broker or an independent agent who works with multiple insurers.

Before you pick a broker or an agent, ask about how they're compensated. Some may receive better commissions from certain carriers and may recommend their policies, even if they're not the best fit for you.

You can also use online brokers that don't offer a personal touch but can provide you with quotes based on your situation and information.

There's no particular time of year in which it's best to re-shop homeowners insurance, so do it when it works best with your schedule.

Steps to Lower Your Homeowners Insurance Rates

In addition to re-shopping your policy, there are several things you can do to improve your chances of securing a lower rate:

  • Improve your credit. According to the National Association of Insurance Commissioners, 85% of homeowners insurance carriers use credit-based insurance scores in states where it's legally allowed. You can get your free credit score and credit report from Experian to see where your credit stands and take steps to improve your credit score to potentially help lower your premium.
  • Raise your deductible. Your deductible is the amount that you have to pay out of pocket in the event of an insurance claim. A lower deductible means less out-of-pocket expenses in that scenario, but it also means a higher premium. If you can afford a higher deductible than the one you have, consider increasing it to see how much you can save on your rate.
  • Bundle your policies. If you haven't already, consider getting your homeowners insurance through the same carrier that maintains your auto insurance policy. Most insurers offer discounts to those who bundle different types of policies together.
  • Improve safety and security. Speak with an insurance agent about steps you can take to improve the safety and security of your home. That may include things like installing a home security system, installing storm shutters, reinforcing your roof, modernizing your heating, plumbing and electrical systems and more.

Note that some of these steps may not be an option for everyone. Take the time to consider which ones may work for you and the potential costs associated with them to decide how to proceed.

Maintain Good Credit for Better Long-Term Insurance Rates

Improving your credit can make it easier to qualify for better insurance rates, but it's important to avoid being complacent once you've achieved your goal. Over time, insurers may re-check your credit at renewal and adjust your premiums accordingly.

Additionally, if you decide to move, your new homeowners insurance rate could depend partly on your credit score.

One good way to maintain good credit is to use a credit monitoring service. Experian's free credit monitoring tool offers access to your FICO® Score based on Experian data as well as your Experian credit report, so you can keep track of your progress. You'll also get real-time alerts when changes are made to your credit report, so you can address potential issues as they arise and avoid significant damage to your score.