7 Common Mistakes That Increase Your Home Insurance Costs

Nobody wants to pay more for insurance than they have to. Yet, millions of homeowners unknowingly make simple errors that drive their premiums up by hundreds of dollars year after year.

Are you guilty of one of these expensive habits? Let’s check the list.

Mistake #1: Insuring for "Market Value"

Real estate prices are skyrocketing, so you think you need to insure your home for its $600,000 sale price. Wrong.

Mistake #2: Setting a $500 Deductible

We covered this in our deductible guide, but it bears repeating. Low deductibles are expensive. Raising your deductible to $1,000 or $2,500 is the easiest way to slash your premium instantly.

Mistake #3: Filing Small Claims

Using insurance as a "maintenance plan" is a disaster. If you file a claim for a $800 broken window, you might get a check for $300 (after your $500 deductible). But now you have a claim on your CLUE report (the insurance credit report) for 5-7 years.

That one small claim could raise your rates by 20% or cause your insurer to drop you entirely.

Mistake #4: Ignoring Discounts

Did you get a new roof? Install a security system? Stop smoking? Retire? Renovate the plumbing?

All of these things can lower your rates, but your agent doesn't know unless you tell them. Call your agent once a year for a "discount review."

Mistake #5: Setting It and Forgetting It

Loyalty doesn't always pay. Many insurers use "price optimization" algorithms that slowly inch up rates for customers who are statistically unlikely to switch.

The Fix: Shop your policy every 12-24 months. You don't have to switch, but getting a quote from a competitor gives you leverage—or peace of mind.

Mistake #6: Underinsuring Your Belongings

Most people guess they have $30,000 worth of "stuff." But if you actually walked through your house and added up every pair of shoes, kitchen appliance, electronic device, and piece of furniture, the total is likely closer to $100,000.

If you underinsure, you will come up short after a total loss.

Mistake #7: Buying the Minimum Liability

It costs pennies a month to increase your liability coverage from $100,000 to $300,000 or $500,000. In our litigious society, $100,000 won't cover much if someone gets seriously injured on your property and sues you. Skimping here is a massive financial risk for almost no savings.

Conclusion

Home insurance is complex, but avoiding these mistakes is simple. Be proactive, ask questions, and treat your policy like a financial instrument, not a utility bill.

Frequently Asked Questions