5 Mistakes That Can Make Your Home Insurance Premiums Expensive

Home insurance is a critical part of protecting your most valuable asset—your home. However, many homeowners end up paying more than necessary for their insurance due to common and avoidable mistakes. Understanding what influences your home insurance premiums can help you make smarter decisions, avoid hidden costs, and potentially save hundreds of dollars each year.

In this article, we’ll explore five major mistakes that can drive your home insurance premiums up. Avoiding these errors can lead to significant long-term savings while still ensuring that your property is well-protected.

1. Underestimating the Value of Your Belongings

One of the most common mistakes homeowners make is underreporting or underestimating the value of their personal belongings. While it might seem like a way to reduce your premiums, this can backfire in a big way when you file a claim.

Why It Matters:

Home insurance not only covers the structure of your home but also the contents inside it—furniture, electronics, clothing, appliances, and more. If your policy doesn’t accurately reflect the value of these items, you might not receive enough compensation after a loss like fire, theft, or flood damage.

Consequences:

Inadequate compensation during a claim
Higher out-of-pocket costs after a loss
Risk of claim denial due to misinformation

Pro Tip:

Create a detailed home inventory list. Use photos, receipts, and documentation to assess the value of your belongings. Many insurance providers offer mobile apps or online tools to help streamline this process.

2. Neglecting Home Maintenance

Insurance companies assess risk before issuing a policy. A poorly maintained property is seen as a high-risk asset, and you’ll pay more for that risk.

Why It Matters:

Leaks, faulty wiring, old roofs, and other maintenance issues can increase the chances of damage or claims. Insurers often conduct inspections or ask for photos before approving your policy or during renewals.

Common Maintenance Issues That Affect Premiums:

Worn-out roofing (especially older than 20 years)
Outdated electrical systems
Plumbing issues
Mold or water damage
Poor drainage around the foundation

Consequences:

Higher premiums due to increased risk
Denial of certain coverages
Policy cancellation if your home is deemed uninsurable

Pro Tip:

Schedule annual home maintenance checks. Keep records of repairs and upgrades as proof of responsible homeownership.

3. Choosing a Low Deductible Without Considering the Costs

Deductibles play a significant role in determining your insurance premiums. A deductible is the amount you agree to pay out-of-pocket before your insurance kicks in. While it may be tempting to opt for a low deductible, this often means significantly higher monthly or annual premiums.

Why It Matters:

A lower deductible increases the insurer’s financial risk, so they compensate by raising your premiums. On the other hand, a higher deductible can reduce your premiums considerably, saving you money in the long term.

Example:

A $500 deductible might cost you $1,200 annually
A $1,500 deductible could bring your premium down to $900 annually

Over time, the savings add up—especially if you don’t file frequent claims.

Consequences:

Overpaying for peace of mind you may never need
Limited flexibility in your budget due to high monthly payments

Pro Tip:

If your emergency fund can cover a higher deductible, it’s often worth the trade-off for lower premiums. Always compare the total cost over multiple years before choosing a deductible.

4. Failing to Bundle Policies or Shop Around

Loyalty doesn’t always pay when it comes to insurance. Many homeowners stick with the same insurer for years without comparing rates or taking advantage of discounts—such as bundling home and auto insurance.

Why It Matters:

The insurance market is highly competitive. Companies frequently offer new deals, promotional rates, and bundling discounts that can save you hundreds of dollars annually.

Consequences of Staying Put:

Missing out on discounts
Higher premiums due to outdated risk profiles
Reduced negotiating power

Smart Shopping Tips:

Get quotes from at least three different insurers every two to three years
Ask about discounts for loyalty, security systems, or claim-free history
Use comparison tools or consult an insurance broker for better deals

Pro Tip:

Bundling home, auto, and even life insurance with the same provider can unlock significant savings—sometimes up to 25%. Just ensure the coverage terms are favorable before making the switch.

5. Ignoring Security and Safety Upgrades

Your home’s security features have a direct impact on your insurance premiums. Homes with better security are less likely to experience theft, vandalism, or fire—making them less risky to insure.

Why It Matters:

Simple upgrades like installing a security system, smoke detectors, or smart sensors can lower your premiums while also enhancing your peace of mind.

High-Impact Upgrades Include:

Burglar alarms and monitoring systems
Deadbolt locks and reinforced doors
Smoke and carbon monoxide detectors
Smart home systems with remote monitoring
Fire extinguishers and sprinkler systems

Consequences:

Missed discounts (5% to 20% depending on the upgrade)
Higher perceived risk by insurers
Higher deductibles or limited coverage in high-risk areas

Pro Tip:

Ask your insurer which safety features can qualify you for discounts. Some companies offer lower rates if you use their preferred security providers.

Bonus Tips: Additional Ways to Reduce Your Home Insurance Premiums

Avoiding the five major mistakes above is a great start. Here are a few more tips to keep your premiums affordable without compromising on protection.

1. Review Your Policy Annually

Your insurance needs can change year to year. Did you renovate your kitchen? Pay off your mortgage? Add a pool or deck? Update your coverage accordingly to avoid paying for outdated or unnecessary features.

2. Improve Your Credit Score

Many insurers consider your credit score when determining premiums. A better score can lead to lower insurance costs.

3. Avoid Filing Small Claims

Frequent small claims can make you appear high-risk to insurers. Consider covering minor repairs out-of-pocket to preserve your claim-free status.

4. Consider Actual Cash Value vs. Replacement Cost

Actual Cash Value (ACV) policies tend to be cheaper but pay less during claims due to depreciation. Replacement Cost policies are more expensive but offer full reimbursement. Choose the best fit for your needs and budget.

Conclusion

Home insurance doesn’t have to be expensive—especially if you’re proactive and informed. By avoiding these five common mistakes, you can keep your premiums in check and your home protected. Remember, insurance is not just about cost—it’s about value, peace of mind, and preparation for the unexpected.

Takeaway:
Make smart choices today to avoid expensive surprises tomorrow. Maintain your home, know what’s covered, and always explore your options. The right home insurance doesn’t have to break the bank.