How to Tell When You're Paying too Much For Your Home Insurance Company (2024)

How do you tell if you’re paying too much for your home insurance policy? As with other types of home insurance policies, rate transparency isn’t a huge priority for most companies. Your rates come from several variables and an equation. It’s hard to figure out how much certain variables impact your final price. In turn, it makes it hard to get the best rate possible. This quick guide will help you determine whether or not you’re paying too much for your homeowner’s insurance policy.

1. You Haven’t Created a Policy Bundle

Are you someone who has your home insurance, auto insurance, and life insurance all under different entities? If so, you could pay too much for it. Many companies offer discounts if you bundle everything under one provider. The discount will depend on the specific entity and what you want to bundle, but it would be wise to check into it.

2. You’ve Had Multiple Claims

Unfortunately, the more claims you file under your homeowner’s insurance, the more your home insurance premiums will increase. How much your premiums increase after each claim depends on what you filed a claim for, your location, any previous claims, and more. If you have a history of filing a lot of claims, the insurance provider can see you as a high-risk client. This can cause your premiums to skyrocket.

You should do everything you can to keep the number of claims you file low. Ideally, all of your claims will be for major issues with your property instead of minor cosmetic issues. The Comprehensive Loss Underwriting Exchange database tracks all of your property or auto claims for the past seven years. So, even if you swap providers after you make a big claim on your insurance policy, they may charge you more based on your history.

3. Low Deductible

If you live in an area with a lower risk of natural disasters and you think you’re paying way too much for your policy, check your deductible. If it’s low, this can drive your premium cost up. Adding to your deductible can lower the annual premium amount because you may pay more out of pocket when you file a claim.

4. You Haven’t Had Your Home Inspected Lately

Ideally, you’ll get your home inspected every few years for newer homes and annually for older ones. By fixing any issues, the inspector points out reduces the chances of filing a claim. One common mistake many people make is to skip the inspection by a licensed professional when they buy a new home. It’s reasonable to assume that a new addition or home won’t have any issues, but it never hurts to be extra cautious.

You can’t guarantee that the contractor or builder’s work is flawless. Getting routine inspections can save you money in the long-term. If you skip the inspections and you have to file a claim as a result, you could pay more. An inspection helps you catch problems much quicker.

5. Your Policy Covers Instances You Don’t Need

One big way to find out if you’re being overcharged for your insurance is to look at what your policy covers. Your home insurance coverage will vary based on your location. But, if you have coverage for everything imaginable and there is a very low risk of it happening, this can drive your costs up. It’s a good idea to talk to a professional and see what type of risks your area is prone to having and adjusting your coverage as needed.

On the other end of the spectrum, you could live in an area that has a lot of natural disaster risk. If this is the case, you may want to safeguard and weatherproof your home. Maybe you want to hurricane-proof your home by making sure your foundation anchors to your walls, or that your home has sturdy doors and storm windows. See which types of coverage you absolutely need and which ones seem far-fetched. Trim your policy accordingly.

6. No Safety Features

Did you recently install safety features in your home, and forgot to update your home insurance policy? Purchasing things like a carbon monoxide detector, smoke detectors, or installing a burglar alarm system are all simple things that can reduce your premiums. But, if you forget to tell your insurance entity that you took these steps, you could find yourself paying more for your insurance than you need to.

7. You House Attractive Nuisances

An attractive nuisance is a feature on your property like a trampoline or pool that could be dangerous, but it attracts people or children. If someone were to jump on your trampoline and sustain injuries, you would be liable for it. Home insurance companies take these features seriously because they have higher injury rates. The biggest attractive nuisances are jungle gyms, trampolines, and swimming pools. If you removed them and didn’t inform your insurance company, you could pay too much for your premium.

8. Your Credit is Low

Most home insurance providers want to work with people who have good credit. They look for people with credit scores in the 700s and up, and they give them more attractive rates. Maybe you had a low credit score when you first applied for your policy, but it’s gone up. If so, you could be overpaying for your policy. Double-check your credit score and let your company know if it increased. The higher it is, the better rate you can get.

9. You Haven’t Compared Rates

One of the best things you can do for yourself to make sure you don’t overpay for your insurance policy is to shop around at least once a year. Compare rates from different companies and see how your current rate stacks up. You never know, you could find a deal and save yourself thousands each year.