Security systems, smoke detectors, and new plumbing don’t just make your home a safer, more comfortable place. Some upgrades can also reduce your home insurance premium.
Miranda is a financial writer and avid podcaster with nearly two decades of experience contributing to major outlets, including Forbes, The Hill, and NPR.
As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
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If you haven’t looked closely at your home insurance policy, you could be missing out on significant discounts for home upgrades. Insurers determine homeowners insurance rates using numerous factors, like your home’s age, ZIP code, and building materials. While you can’t change certain things, a few improvements could reduce your home insurance premium.
Installing a new security system, adding smart home features, replacing your roof, and upgrading your plumbing are among the home upgrades that can help you save. Next time you’re looking for a home improvement project, consider these fixes to lower your homeowners insurance premium.
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1. Replace your roof
Replacing your old roof might help you lower your homeowners insurance rates because a new roof will better protect against wind damage and reduce the risk of leaks, especially in hurricane-prone areas.
A new roof could lower your rate by 5% to 35%, according to home improvement services site Angi.[1] Discounts vary among insurers, but most companies have guidelines for eligible materials based on impact and wind resistance. The Insurance Institute for Business & Home Safety provides shingle performance ratings to help you find the most durable option.
Newer roofs often have better materials and updated features. If you replace your older roof with one more likely to withstand a hurricane or fire damage, you could see lower rates from home insurers. You can expect to pay between $5,700 and $16,000 for a roof replacement, depending on the roof’s size and the materials used.[2]
2. Install a home security system
Installing a security system in your home could reduce your insurance rates since it can lead to a lower chance of theft and other vandalism damage to your home. Whether your insurer will reduce your premium depends on the type of system you install, your policy, and whether the alarms go straight to a dispatcher rather than simply alerting you.
Good to know
On average, home security systems cost between $300 and $840 to install, according to HomeGuide. Costs may vary depending on the system’s quality and whether you pay an agency to monitor your home.3
3. Upgrade your plumbing
If you live in an older home, you may have outdated cast iron or galvanized steel pipes that are more likely to corrode or rust. Upgrading your old pipes to a modern material, like copper or CPVC plastic, can reduce your risk of leaks and water damage.
Repiping a house costs an average of $7,500, according to contractor services site HomeAdvisor.[3] However, a plumbing upgrade could lower your home insurance rates or make you eligible for discounts.
4. Install smoke detectors and a sprinkler system
Fires can cause extensive damage to your house and personal belongings. A fire can cause about $3,000 to $43,500 in restoration costs, according to Angi. For example, restoring your kitchen after a fire can cost up to $20,000, depending on the type of damage.[4]
Insurance companies often provide incentives for installing a sprinkler system or smoke detectors. Sprinkler discounts can be as high as 35%, according to a Home Fire Sprinkler Coalition survey.[5] However, discounts vary by insurer, so it’s best to check your company’s website or speak to an insurance agent to learn how much you can save.
5. Get rid of your pool
Standard homeowners insurance typically covers swimming pools, but you can expect a higher premium if you have one. Home insurance companies consider pools an “attractive nuisance” because having one increases the risk of a lawsuit if someone gets injured while using it.
If you installed a pool in your home, you’re probably not eager to get rid of it just to lower your home insurance premium. However, if you inherited a pool and don’t want to deal with the upkeep, filling it in could help you save time and money on maintenance and lower your home insurance costs.
6. Use smart home technology
Devices like doorbell cameras and automatic lights can help you protect your home and keep other costs down. Plus, you can monitor what’s going on while you’re out of town and act quickly if there’s a problem.
Ask your insurer about any discounts for smart technology home improvements. On average, converting your home to a smart home is likely to cost around $835.[6] Your monthly costs may be higher if you have smart home gadgets and active monitoring by a third party.
Water damage and freezing accounted for nearly 24% of homeowners insurance losses in 2021, according to the Insurance Information Institute. The average claim was for more than $12,500, making water damage an expensive fix for insurance companies.[6]
An automatic water shut-off valve monitors the flow in your home’s pipes or detects groundwater, then shuts off the water supply if it senses any irregularities. Some insurance companies lower your premium upon renewal or offer discounts for these detectors since they can prevent severe water damage. Ask an insurance agent to find out which devices qualify.
Other ways to lower homeowners insurance costs
You have plenty of other ways to lower your insurance costs, including:
Increase your deductible. If you’re willing to pay more out of pocket, you could see lower rates. Additionally, paying your premium annually might result in discounts.
Bundle your insurance policies. Consider combining your homeowners insurance with your car insurance. Many companies offer a discounted rate when you bundle multiple policies.
Build good credit. A high credit score might result in some savings for your insurance premiums, as most insurers consider your credit when setting premiums.
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3 home improvements that can increase home insurance costs
Not every home improvement leads to lower premiums. In some cases, you might see higher insurance costs due to greater liability or an increase in the market value of your home. Here are some home improvements that might increase your home insurance premiums.
Putting in a pool
Having a swimming pool increases your home’s liability risk. Insurers usually consider pools a safety risk, so you might pay higher premiums after installing one. Some insurers may even refuse to cover your home if you have a pool, according to the National Association of Insurance Commissioners.[7]
You may be surprised to learn that your insurer might not cover your home office and its equipment. Even if it does, coverage is often limited. You might need to increase your coverage, which can lead to higher insurance premiums.
Building an addition to your home
Building an addition typically increases the value of your home, which could result in increased premiums, as the extra square footage increases how much your insurer would need to pay to rebuild it. You probably won’t need a new policy, but you might need to increase your coverage limits.
Factors that affect your homeowners insurance costs
A few common factors affect how much you’ll pay for home insurance, including:
Square footage: The size of your home is one of the main factors that affect your home insurance costs. A bigger home generally costs more to replace and rebuild, so you’ll typically pay more to insure it.
Location: Another key factor that insurers consider when setting insurance rates is where you live. Some ZIP codes may have a greater risk of severe weather, theft, or flooding, so insurers factor that into your policy’s cost.
Age of your home: Older homes might cost more to insure than newer ones, especially when they have outdated systems. Insurers usually consider factors like old electrical wiring, plumbing, roofs, and more when setting home insurance premiums.
Other issues: Many other factors affect home insurance premiums, including whether you have certain dog breeds, a swimming pool or trampoline, a home office, or anything that might be considered a hazard.[8]
Home improvements to lower insurance FAQs
Here are answers to some commonly asked questions about how home improvements affect insurance.
Should you report home improvements to your insurance company?
Yes, you should report changes to your home to your insurance company. Home improvements often affect a home’s value and risk level, which may change how your insurer writes your policy.
Will homeowners insurance pay for home renovations or repairs?
Homeowners insurance typically won’t pay for regular repairs or improvements. For the most part, insurers only cover items related to damage from covered events, such as natural disasters, vandalism, and theft.
What is an attractive nuisance in home insurance?
An attractive nuisance is something that might attract children to your property and poses a danger to them.[10] Swimming pools and trampolines are common examples of attractive nuisances.
Do homeowners insurance companies offer discounts?
Yes, many home insurance companies offer discounts. Many things could qualify you for a discount, including living near a fire hydrant, having fire sprinklers, installing a home security system, flood sensors, wind-resistant shutters, and more. Call your insurance company to learn about discounts you qualify for.
Is homeowners insurance required?
No, homeowners insurance isn’t required by law.[11] But most mortgage companies will require you to have it to protect their investment in your home. Additionally, it’s important to have homeowners insurance for your own financial protection, as home repairs can be very costly.
Miranda Marquit, MBA, is a freelance financial writer covering various markets and topics since 2006. She has contributed to numerous media outlets, including Forbes, TIME, The Hill, NPR, HuffPost, Yahoo! Money, and more. Her work has been syndicated by MSN Money, Marketwatch, Credit.com, and other publications. She has written about insurance topics for Clearsurance, HealthCare.com, and various other websites. She is also an avid podcaster and co-hosts the Money Talks News podcast. Miranda has a Master’s Degree in Journalism from Syracuse University. Connect with her on LinkedIn.
As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
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