I can’t afford my home insurance, what do I do?

According to data from the National Association of Realtors (NAR), the average U.S. insurance rate is $2,377 a year. The data also suggest that homeowners could see a 6% rise in rates by the end of the year which is in addition to the 20% increase over the two previous years.

As climate change pushes the cost of homeowners insurance higher, there are areas of the country where the cost of coverage may make homeownership impossible for some. According to data from Intercontinental Exchange Inc, insurance premiums can easily eat up 10% of monthly housing costs and that figure goes to 25% in high-risk areas. 

If you are struggling to afford your coverage, here are five tips to help you save money on your insurance coverage. 

Shop Your Coverage

This is probably the best way to lower your insurance costs, particularly if you are having trouble paying your mortgage. Insurers rate risk differently which can result in dramatic differences in premium quotes. 

Shop your homeowners insurance coverage once a year and gather at least five quotes from regional and national insurers. Always make sure you are comparing apples to apples when it comes to coverage levels and deductibles. Ask friends and family for recommendations, shop online, read reviews and consider consulting an independent agent.

Raise your deductible

Pushing up your deductible is a great way to lower your premium. Insurers like it when you have more skin in the game, so they discount your rate if you raise your deductible. If you can afford to double your deductible you should see a significant discount. Always choose a deductible that you can easily afford in the event you have to make a claim on your policy. 

Check with the state insurance department

Your state insurance department can be an excellent resource to save money on your homeowners insurance. They can often steer you towards more affordable insurance companies or offer tips on how to cut the cost of your coverage. 

Many states run insurers of last resort which offers coverage to homeowners who cannot find affordable or in some cases, any coverage at all in the private market. In Florida, the insurer of last resort is called Citizens Property while many other states have FAIR plans which are their version of insurers of last resort. 

FAIR plans tend to be more expensive and offer less coverage but if you are struggling to find coverage in the private market, they may be your only option. 

Upgrade your home

Upgrading your home to better deal with storms can lead to a lower premium. Adding wind and hail resistant shingles or dual pane tempered glass windows can result in a significant discount on your premium. 

You can also snag a lower premium by adding non-flammable siding or fiber cement boards as well as a monitored security system. Check with your insurer regarding which upgrades will help lower your insurance costs. 

Discounts

Insurers offer a variety of discounts, and they can result in major savings. Common discounts include monitored security systems, bundling, upgraded roof, loyalty, senior citizens and more. 

Call your insurance company to make sure all available discounts are being applied to policy and see if there are any that you can easily qualify for to be added to your policy.