Revealed: What 6 home insurance discounts will save you

Chris Kissell

Everybody wants to save a buck, and there are many simple ways to slash home insurance costs.

From raising your deductible to simply aging gracefully, there are scores of ways to cut your premium by 5 percent, 10 percent or even 25 percent.

It is important to note that insurance discounts are not cumulative, so you may have to sit down with your agent to decide which price break will save you the most money.

Following are six home insurance discounts, and how much you’re likely to save on each, according to insurers and the nonprofit Insurance Information Institute.

Discount 1: Raise your deductible to $1,000

Savings: 25 percent

When buying homeowners insurance, you must choose a deductible. Upon filing a claim, the deductible is the amount of money you pay out of pocket before the insurer begins to reimburse the loss.

Raising your deductible to $500 or $1,000 can substantially lower your premium costs.

However, this is one discount where you should look before you leap, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association

“Before raising your deductible, consider the amount of out-of-pocket money you could afford to pay if you were to file a claim,” she says.

If you couldn’t find the money to promptly pay the deductible, you probably need to choose a lower deductible amount that is within your budget, even if it means a higher monthly premium.

Discount 2: Install a sophisticated sprinkler system

Savings: 25 percent

A good sprinkler system springs to action quickly to snuff out fires soon after they begin.

Home-based sprinklers reduce the risk of fire-related death by 80 percent, and cut the average property loss by 70 percent, according to the National Fire Protection Association NFPA).

And yet, just 4.6 percent of occupied homes had sprinklers in 2009, according to the most recent figures from NAPFA.

Not only can installing sprinklers save your life, but it also can cut your homeowners insurance bill.

For example, State Farm offers two automatic sprinkler discount options, says Michal Brower, a company spokeswoman.

A 10 percent discount may be applied to the homeowners basic premium not including hurricane coverage) if automatic sprinklers are in located in all areas, including bathrooms, attics, closets, and attached structures.

A 5 percent discount may be applied to the non-hurricane) premiums of homeowners who have automatic sprinklers in parts of the house, but not in bathrooms, attics, closets and attached structures.

Discount 3: Install fire and burglar alarms, smoke detectors, or deadbolt locks

Savings: 5 percent to 25 percent

Keeping your home safe from both crooks and Mother Nature can net you savings.

Allstate offers a “safe home” discount of up to 15 percent. Justin Herndon, an Allstate spokesman, says the price break is not limited to a particular brand of security system.

“Something as common as smoke detectors on every floor and a fire extinguisher and dead bolts on all exterior doors can qualify,’ he says.

Discounts vary, with the largest adjustment given to customers who install a system that automatically notifies police or fire departments in the wake of an incident.

Some companies offer substantially more generous discounts. For example, the Hartford reduces premiums by up to 20 percent for homeowners who install a combination of burglar and fire alarms.

If you live in an apartment or condominium, you can get an additional credit if your development has 24-hour security guard services.

Discount 4: Bundle your policy

Savings: 5 percent to 15 percent

When you bundle policies, you simply buy different types of coverage — such as homeowners and auto insurance — from the same insurer.

Many insurance companies offer a discount to policyholders who “bundle” their coverage in this way. III says savings average between 5 percent and 15 percent, but some companies offer even deeper price breaks.

For example, Nationwide offers up to 20 percent off for policyholders who bundle homeowners and auto coverage. Add life insurance to the mix, and your savings could reach 25 percent.

In addition to saving money, bundling apparently makes customers happier, too.

A 2012 J.D. Power study found that customer satisfaction among home insurance policyholders improves by 19 percent if they bundle auto and homeowners policies.

Discount 5: Reach your 55th birthday

Savings: 10 percent

In the eyes of an insurer, policyholders typically age like fine wine.

Many insurance companies offer price breaks to consumers who reach a certain age and are retired. For example, Nationwide offers up to 15 percent off premiums for policyholders who are 60 or older.

“Typically, the older the customer, the deeper the discount,” says Scott Mallasee, property product development director at Nationwide.

The exact discount depends on many factors, including your insurance company and the state you live in.

Discount 6: Staying with the same insurer for at least three years

Savings: 5 percent to 10 percent

Shopping around regularly for new insurance quotes is one of the best ways to save money. The III recommends that you seek out at least three quotes to try to nab the best deal.

However, you may find it makes more sense to stay with your current insurer. Many insurance companies offer loyalty discounts to policyholders who remain customers over a period of time.

For example, Allstate customers in some states may save up to 10 percent when renewing their policy after one year of coverage, Herndon says.

See how much you could save today on your home insurance. Get your free home insurance quotes today!