How I Lowered My Homeowner's Insurance by Over 60%

Photo credit: Amy Suardi

"Do I need flood insurance in a fourth-floor apartment?" my friend Jamie asked himself recently. But after being attacked with a 48-page document from his insurance company, he decided it was easier just to pay.

All the jargon, riders and provisions, and "enhanced" this and "personal property" that is enough to make you burrow under the covers. But since we are buying a house for the first time, I had to educate myself, and let me tell you, it was not pretty.

I won't pretend I'm an expert and tell you what kind of insurance you need or don't, but here is the tale of how I cut my rate by 63%.

1. Knowledge is Power

I gathered information, deciphered the jargon, and built the confidence to know what I needed and what I didn't.

How to do this? If you own a house, ask if your lender has a unbiased homeowner's insurance information line. Consult the helpful information at the non-profit Insurance Information Institute. Talk to friends and family who have been through it. Shop around for the best rates and ask questions.

2. Let's Face It, My House is Not a Museum

I called back the insurance company who came in with the lowest quote, and reduced my coverage for personal property (everything inside the house) from 75% of the house's value to 50% (the lowest allowed). Given that housing prices in Washington, D.C. are inflated, I figured this amount was more than plenty to cover our IKEA furniture and Best Buy stereo.

3. Banking on Good Luck

I raised my deductible from $1,000 to $5,000. According to a Wells Fargo insurance expert I spoke with, claims are very, very rare. And they should be. Each claim we make is like a black X on our public insurance record. Some companies will even dock you for just calling the claims department.

Homeowners insurance is disaster insurance. So unless your roof is missing, call a handyman.

4. Extra Credit

By going with the company who has issued my auto and renter's insurance for 14 years (USAA), I got rewarded with a huge discount for:

bundling my car and home insurance
doing other business with them (I use their online bank)
not making any claims for a long time
having a burglar alarm (even though it's not in use)
paying my bills on time, and
being a loyal customer

Reducing my personal property coverage and raising my deductible brought my bill down by an entire third, and the extra credit by another third. So the next time you need homeowner's insurance, go ahead and play around with it. Because maybe insurance is not, but saving money is fun.

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