If you’re struggling to afford your homeowners insurance, you’re not alone. Many people face this challenge, especially if premiums rise unexpectedly or if you’re dealing with other financial pressures.
However, not having homeowners insurance can leave you vulnerable to significant financial loss if something happens to your home.
The good news is that there are several steps you can take to make it more manageable. Whether it’s adjusting your coverage, shopping around for a better deal, or finding discounts, there are ways to lower the cost without losing your protection.
In this article, we’ll explore practical tips on what to do if you can’t afford your homeowners’ insurance premiums. So you can find a solution that works for both your budget and your peace of mind.
Steps To Take If You Can’t Afford Homeowners Insurance
The following are steps you can try out if you can’t afford your homeowners insurance premiums. Check them out;
Be Bold
If you can’t afford to make your next homeowners insurance payment, contact your agent or insurance company as soon as possible, ideally before your payment is due.
While there may be a grace period if you miss the deadline, failing to pay could lead to your policy being canceled.
Letting your insurance lapse can make it harder to get affordable coverage later on, and if something happens to your home while you’re not covered, the insurer won’t pay for the damage.
By reaching out early, your insurer can work with you to find solutions, like applying for additional discounts or setting up a new payment plan to make things easier.
Shop Around
Every insurer calculates its own rates differently. So if you are with an expensive one, it is advisable that you seek other options.
You can get home insurance quotes in a few ways: online, by calling insurance companies, or by working with an agent. Some companies, like State Farm, have their own agents who only sell their policies, while others use independent agents who can compare rates from different insurers.
It’s a good idea to get at least three quotes to make sure you’re getting a fair price. However, in places like Florida or Louisiana, it can be harder to find quotes because many insurance companies have pulled out due to climate risks. If you’re struggling to find coverage, an experienced independent agent can help.
Some states also have last-resort insurance options, known as FAIR plans, for homeowners who can’t find insurance elsewhere. An agent can help you access these if needed.
Contact Your State Insurance Department
Another helpful resource is the State Insurance Department. Just like independent insurance agents, state agencies can help in providing you with guidance on which insurance carrier in your location offers the best plans for your needs and budget.
Look Out For Discounts
Many insurance companies offer ways to save on your policy, such as discounts for bundling multiple policies, using smart home devices, or even working in certain jobs. Be sure to talk to your agent or company representative to make sure you’re getting all the discounts you qualify for.
Making improvements to your home can also help lower your insurance costs, especially if they reduce the risk of future damage. For example, adding hurricane shutters in Florida could earn you a discount, and creating defensible space around your home in California could save you money on wildfire coverage.
However, it’s important to consider the cost of these improvements compared to the potential savings, especially if you’re on a tight budget.
Increase Your Deductible
A homeowners insurance deductible is the amount you have to pay out of pocket when you make a claim. For example, if you have a $1,000 deductible and a fire causes $8,000 in damage, your insurance will cover $7,000, and you’ll pay the remaining $1,000.
Choosing a higher deductible can lower your insurance premiums. For instance, increasing your deductible from $1,000 to $2,500 could save you around 11% on your yearly costs.
However, keep in mind that if you need to file a claim, you’ll have to pay a larger amount upfront before your insurance covers the rest.
Build Your Credit
Improving your credit can help lower your homeowners insurance costs, although it might be tough if you’re already struggling with bills. Many insurance companies use credit-based insurance scores, which are similar to regular credit scores, to help determine your rates.
Studies show that people with lower credit scores are more likely to file claims, so insurers often charge them higher premiums, sometimes much higher. In fact, homeowners with poor credit can pay nearly twice as much for insurance as those with good credit, based on our research.
However, it’s important to note that in states like California, Maryland, and Massachusetts, insurers can’t use your credit score to set your homeowners insurance price.
Update Your Coverage
If you’ve explored all the other options and still can’t afford your home insurance, see if you can adjust your policy to lower the cost.
For example, you might be able to remove optional coverage like identity theft protection or appliance breakdown coverage. If you no longer own certain jewelry, you can remove that coverage too. Another option is switching your roof coverage from replacement cost to actual cash value.
However, reducing your coverage is risky and should only be a last resort. If you’re underinsured and something happens, you could end up paying thousands of dollars out of pocket to repair or replace things. But having some coverage is definitely better than having none at all.
What Should I Not Do If I Can’t Afford Insurance?
We strongly advise against canceling your homeowners insurance entirely. If you have a mortgage, keeping homeowners insurance is usually a requirement.
If your lender finds out that your coverage has lapsed, they will often buy a policy for you, called “force-placed insurance.” This type of insurance tends to be more expensive and offers less coverage than a regular policy.
If you don’t have a mortgage, you might consider going without homeowners insurance, but it’s a risky choice. For example, if a fire or tornado destroys your home and you don’t have insurance, you could lose everything and be left with nothing but your own savings to rebuild. Unless you have a lot of savings, this is a situation you’ll want to avoid.
