What actually lowers your home insurance premium

Home insurance premiums fall when you reduce the risk the insurer takes on. The main levers are bundling policies with the same company, raising your deductible, improving home security, and maintaining a clean claims history. Some insurers also discount for things like being a homeowner for a certain number of years, paying your bill in full upfront, or completing a home safety course. The size of the discount varies by insurer and by state — there is no standard amount.

The single largest reduction usually comes from bundling: combining your home and auto insurance with one company typically saves 15 to 25 percent on each policy, though the exact amount depends on the insurer and what coverage you choose. After that, raising your deductible (the amount you pay out of pocket before insurance kicks in) lowers your premium, but it also means you pay more if you file a claim. The trade-off is real and worth calculating before you move the deductible up.

Key Takeaways

  • Bundling home and auto insurance with one company typically saves the most money, though the discount varies by insurer.
  • Raising your deductible lowers your premium but increases what you pay if you file a claim — calculate the trade-off before deciding.
  • Home security improvements like deadbolts, alarm systems, and storm shutters can reduce your premium, but only if your insurer offers a discount for them.
  • A claims-free history and paying your bill in full upfront are two of the easiest ways to keep your rate from rising.
  • Shopping around every two to three years often uncovers better rates than staying with your current insurer, even if you have discounts.

Bundling policies with one insurer

Most home insurers offer a discount when you also insure your car with them. The discount is automatic once both policies are in place — you do not have to ask for it. The size of the discount varies: some companies offer 15 percent off each policy, others offer 20 or 25 percent, and a few offer more. The discount applies to your home insurance premium, your auto premium, or both, depending on the insurer's structure.

Bundling also simplifies billing: one payment, one renewal date, one company to contact if something happens. The downside is that you lose the ability to shop each policy independently. If your auto insurer raises rates sharply or drops coverage you need, switching just that policy means losing the bundle discount on both. Before you bundle, compare the bundled price against what you would pay for home insurance alone with a different company — sometimes the bundle discount does not make up for a higher base rate.

Raising your deductible

Your deductible is the amount you pay toward a claim before your insurance covers the rest. Common deductibles are $500, $1,000, $2,500, and $5,000. Raising it from $500 to $1,000 typically lowers your premium by 10 to 15 percent. Moving from $1,000 to $2,500 usually saves another 10 to 20 percent. The higher you go, the more you save on premiums — but the more you pay if you file a claim.

The math matters. If raising your deductible from $1,000 to $2,500 saves you $200 per year, you break even after 7.5 years of no claims. If you file a claim in year two, you pay an extra $1,500 out of pocket. Raise your deductible only if you have savings set aside to cover it. A good rule: do not raise your deductible higher than the amount you could pay in cash without hardship.

Home security and safety improvements

Insurers offer discounts for features that reduce the risk of theft or damage. Common discounts explore to deadbolts on exterior doors, alarm systems monitored by a professional company, smoke detectors, fire extinguishers, and storm shutters or reinforced garage doors in hurricane-prone areas. Some insurers also discount for updated electrical or plumbing systems, or for a roof less than 10 or 15 years old.

The discount amount varies widely — anywhere from 5 to 20 percent depending on the feature and the insurer. Before you install anything, ask your insurer which improvements they discount and by how much. A $2,000 alarm system that saves you $100 per year takes 20 years to pay for itself. A $300 deadbolt upgrade that saves you $50 per year is a better investment. Some insurers will send an inspector to verify improvements before explore the discount, so budget time for that step.

Maintaining a clean claims history

Every claim you file stays on your record for three to five years, depending on your state and insurer. Filing a claim — even a small one — can raise your premium when it renews. Filing multiple claims in a short period raises it more. Some insurers offer a discount for going a certain number of years without filing, often called a claims-free discount or loyalty discount.

This does not mean you should never file a claim. If your roof is damaged in a storm or your house is broken into, filing is the right choice. But for small damage you could afford to pay for yourself — a broken window, minor water damage, a dented gutter — paying out of pocket sometimes costs less than filing a claim and watching your premium rise for years. Calculate the cost of the repair against the cost of your premium increase before you decide.

Paying your bill in full and on time

Insurers often discount your premium if you pay the full annual bill upfront instead of in monthly installments. The discount is usually 5 to 10 percent. Paying on time, every time, also prevents your policy from being cancelled for non-payment, which can make it harder and more expensive to get insurance elsewhere.

If paying the full year upfront is not possible, set up automatic payments from your bank account. This ensures you never miss a due date and sometimes qualifies you for a small discount. Some insurers also offer discounts for paperless billing — receiving your policy documents and renewal notices by email instead of mail — though the savings are usually just 1 to 3 percent.

Shopping around every two to three years

The single most effective way to lower your premium is often to switch insurers. Rates change year to year, and the company that was cheapest when you bought your policy may not be the cheapest now. Getting quotes from three to five other insurers every two to three years usually uncovers a better rate, even if you have discounts with your current company.

When you shop, use the same coverage limits and deductible for each quote so you can compare apples to apples. Tell each insurer about discounts you have — bundling, safety features, claims-free history — so the quote reflects what you would actually pay. Once you find a better rate, contact your current insurer and ask if they will match it. Many will, to keep your business. If not, switching takes about 15 minutes: you fill out an process, pay the first premium, and your new policy starts on the date you choose.

Frequently Asked Questions

Does my credit score affect my home insurance premium?

Yes, in most states. Insurers use a credit-based insurance score — different from your credit score — to set rates. The better your score, the lower your premium. Paying bills on time and keeping credit card balances low help. If your score is low, paying your insurance premium on time for a year or two may improve it enough to may have access to for a rate reduction when you renew.

Will my premium go down if I install solar panels?

Some insurers offer small discounts for solar panels because they reduce the risk of fire or electrical damage. The discount is usually 2 to 5 percent and is not offered by all companies. Ask your insurer before you install whether they discount for solar, and by how much, so you can factor it into the cost.

What happens to my premium if I file a claim and it is denied?

A denied claim does not usually raise your premium because you did not receive a payout. However, it still appears on your claims history, and some insurers may view repeated claim attempts — even denied ones — as a sign of higher risk. If a claim is denied, ask your insurer whether it will affect your rate at renewal.

Can I get a discount for being a long-time customer?

Many insurers offer loyalty discounts after you have been with them for three, five, or ten years. The discount is usually 5 to 10 percent. Ask your insurer whether you may have access to and whether the discount is automatic or if you need to request it. Even with a loyalty discount, shopping around every few years often reveals better rates elsewhere.

Does the age of my house affect my premium?

Yes. Older homes typically cost more to insure because they have older electrical, plumbing, and roofing systems that are more likely to fail. Updating these systems — or at least having them inspected and certified as safe — can lower your premium. Some insurers will not insure homes built before a certain year without recent upgrades.