Why you should shop your home insurance rate every year

This article has been updated from a previous version.

For most people, home insurance tends to be something they set and forget. If you’re one of those people you could be missing out on the potential to save money.

By making a point to shop around for home insurance every year you could save hundreds of dollars, sometimes even thousands on your annual rate.

Home insurance rates fluctuate annually and aren’t regulated

Home insurance rates aren’t regulated by the government the way auto insurance rates are. This means that home insurance companies don’t have to apply for approval each year to raise their rates. 

The rates that insurance companies charge each year are based on each company’s individual claims experience. In other words, no two insurance companies will dole out the same rate because in a given year, one insurance company may have had to pay out more claims than another. 

For example, if an insurance company has a lot of policyholders whose homes were damaged by a natural disaster, such as a flood or wildfire, they will need to charge higher rates the following year to recoup some of the losses they had to pay out due to the disaster. An insurance company whose policyholders were not impacted by that (or another) natural disaster that year, by contrast, may not need to charge as high of rates.

Of course, there are other reasons why you could find a better rate somewhere else. It might be that a newer insurance company is trying to grow its book of business and attract new customers, so they are offering a more competitive rate. Or maybe there’s an insurance company that offers discounted rates for new customers. Whatever the reason — this is why it’s in your best interest as the consumer to shop around for home insurance on an annual basis.

When to shop around for the best home insurance rate

At the same time every year, your home insurance policy comes up for renewal. A few weeks prior to this date you should receive a renewal notice from your current insurance provider. This is the perfect time to shop around for home insurance. 

Why? 

Because your renewal notice will outline what your insurance rate will be for the next year and what protection your policy will provide, if you choose to renew. It’s all the information you need in order to compare rates and coverage.

How to make shopping around for home insurance quick and painless

The biggest reason most people don’t shop around for a better home insurance rate each year is they think it’s going to be a hassle and take up too much of their time. But it doesn’t have to. The quickest and simplest way to shop around for the best home insurance rate is to have an insurance broker or independent comparison site do it for you.

A broker isn’t tied to one insurance company. They have the option of selling insurance policies from multiple companies. All they need to shop around for the best home insurance rate on your behalf is your renewal rate and a breakdown of the coverage being offered. In most cases an insurance broker can inform you of which insurance company offers the coverage you need at the best rate in as little as five minutes.  

Similarly, independent rate comparison websites like ours allow you to compare home insurance rates for free from providers in as little as three minutes. All you need to do is input some basic information and you’ll be shown the lowest rate based on your unique needs.

Remember, it’s not just about the rate

When shopping around for home insurance, your goal shouldn’t only be to get the lowest rate. You want the best coverage, too.

Sometimes, two insurance companies might be offering the same rates, but the coverage from one may be more comprehensive than the other. 

How is this possible? Because every insurance company has their own way of assessing the risk of insuring your home. This influences what they are prepared to cover and at what cost. 

Remember, sometimes it might be worth paying a slightly higher rate than you want to because the coverage being offered is more comprehensive and the deductible is lower.