Six home insurance mistakes that are costing you big

Stephanie Colaco
Home insurance is your safe bet against disasters that may affect your home. But paying for a high home insurance policy can be tough. To help, we've outlined some ways you might be missing out on savings - and tips on how to take advantage of home insurance discounts.

If you're paying a lot of money for your home insurance policy, you're probably missing out on some home insurance savings that could put some of that money back where it belongs: in your hands.

To help, we've outlined some ways you might be missing out on savings - and tips on how to take advantage of home insurance discounts.

#1: You're 55 or Older and Haven't Looked into Senior Citizen Discounts

Getting older can be a bit scary, but there are some benefits that come along with aging. Perhaps most importantly: senior citizen discounts. And they're not just available at IHOP.

In fact, as you get older and retire, you may qualify for a home insurance discount, according to the Insurance Information Institute.

Why? "Since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner," notes the III's website. This could avert a disaster and negate the need for a claim.

For this reason, "If you are a senior citizen aged 55 and above, you may qualify for a home insurance discount of up to 10 percent at some companies", says Loretta Worters, vice president of communications at the Insurance Information Institute.

This is one situation in which age has its privileges, wouldn't you agree?

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#2: You Have Multiple Insurance Policies…With Multiple Companies

Buy more, save more? That's certainly the case when it comes to insurance, according to Worters.

Whether it's a combination of home insurance, health insurance, auto insurance, or some kind of specialty insurance, bundling all of your insurance policies with one provider could score you some big savings.

"Some insurance companies will reduce your premium by 5 percent to 15 percent if you buy two or more insurance policies from them," says Worters. But it's important to "make certain that this combined price is lower than buying the coverage from different companies." If so, you will most likely save a sizable chunk on your insurance payments.

So if you have more than one policy, check to see if your provider offers a discount for bundling them. If they don't, it is perhaps a good idea to find one that does.

#3: It's Been Over a Year Since You've Shopped Around for Home Insurance

"The premiums charged for homeowners and renters insurance vary widely from company to company, so it pays to take the time and effort to shop around in order to get the best value for your insurance dollar," according to the California Department of Insurance's website.

But how often should you look for a better insurer or policy?

Tyler Gray, a Tulsa-based financial advisor for SageOak Financial, LLC, recommends getting "quotes from two to three major carriers and a trustworthy independent insurance agent every year around the time they are due for renewal."

But price isn't the only factor you should consider when insurance shopping, warns Worters.

"Don't shop price alone. You want a company that answers your questions and handles claims fairly and efficiently," she says. "Ask friends and relatives for their recommendations. Select an agent or company representative that takes the time to answer your questions. Remember, you'll be dealing with this company if you have an accident or other emergency."

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#4: You Installed Protective Devices, But Haven't Inquired About Discounts

When you first thought of installing smoke alarms, deadbolts, fire extinguishers/alarms, burglar alarms, or even sprinklers, your only motivation might have been the protective functions of these devices.

But did you know that insurance companies value these additions as much as you do - and are willing to offer a nice rate reduction for them?

"You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks," says Worters. "Some companies may cut your premiums by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire, or other monitoring stations."

You could also save on your premium by adding storm shutters and shatter-proof glass, reinforcing your roof, and retrofitting older homes to make them more earthquake-proof, adds Worters.

If you've already installed some of these features, check with your insurer to see if you are eligible for a discount. If your provider does not offer discounts for protective devices, you might be better off finding one that does.

#5: You Haven't Considered Raising Your Deductible

"The higher the deductible, the more money you save on your premium," explains Worters.

To clarify, your deductible is the amount you have to pay out-of-pocket in the event you have to file a claim - before the policy will kick in. And the more you're willing to pay, the more you'll save on your premium.

But is it always a good idea to raise your deductible?

While it has its merits, namely, a lowered insurance premium, Gray says, "Be careful that you don't raise the deductible until you have the money in savings to cover a larger deductible, should you need to file a claim."

For example, Gray says that if you want to raise your deductible from $500 to $1,000, it's important to have the extra $500 in savings to cover the added amount you'd be responsible for in the event of a claim.

So, how much can you save by raising your deductible?

"Most insurers have deductibles of $500 or $1,000, but if you can afford to raise it to $2,500, you may save as much as 25 percent," says Worters.

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#6: You've Been Claim-Free for More than 3 Years, But haven't Received a Discount

You probably know that automobile insurance companies offer a "good-driver discount" for those who maintain a crystal clear claims record. But did you know that a home insurance equivalent, called "claims-free discount," also exists?

The magic claims-free number? Three years.

"In some states, if you maintain a loss-free record for three years, you'll receive a discount on home insurance. Other states it may be five years," says Worters.

By virtue of being claims-free, your insurance company has made money over the years and as a result, will be willing to pass on some of the savings to you in the form of a claims-free discount.

The amount you can save will depend on the insurer, so it's important to shop around and find the right insurer - the one who's offering the best rates and discounts.