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How I lowered our home insurance by $500

Man in floral shirt and khaki pants jumping in a desert.

My wife and I bought a house in a suburb north of Austin in July of 2021. It was a new house and construction didn’t wrap up until the end of the year. We finally signed our closing papers in late December and moved in on January 1, 2022.

During closing, the builder—D.R. Horton—gave us the option of purchasing home insurance through their partner company.1

To be frank, we were so overwhelmed by this point—first-time homebuyers!—that I didn’t give the matter much thought. The price looked reasonable and the papers were ready so I used this as a chance to avoid adding another item to my TODO list.

But no good thing lasts forever. Thankfully so, I guess—otherwise I’d have nothing to write about.

So without further ado, I present my five-part play, How I Lowered Our Home Insurance By $500.

Part 1: Our first home insurance

In 2022, we had home insurance through Homeowners of America, the external insurer D.R. Horton used.

The premium was $599—we paid this premium in full at closing—and our coverage was as follows:

CoverageLimits of LiabilityPremium
Coverage A. Dwelling$229,000$389
Coverage B. Other Structures$22,900INCL
Coverage C. Personal Property$137,400$28
Coverage D. Loss of Use$45,800INCL
Coverage E. Personal Liability$300,000$25
Coverage F. Medical Payments$5,000$10
Increased Replacement Cost$18
Service Line Coverage$15
Refrigerated Property Coverage$10
Constant or Repeated Seepage$9
Personal Property Replacement
Cost Loss Settlement
INCL
Residence Glass CoverageINCL
Fully-earned MGA fee$95
Total$599
DEDUCTIBLE 1: Windstorm, hurricane, hail,
and wind-driven rain
1% - $2,290
DEDUCTIBLE 2: All other perils1% - $2,290

*Note: For an overview of what each of these coverages are, see this post.

The “fully-earned” part of the $95 MGA2 fee means that even if you terminate your policy, you won’t get this money back, unlike the rest of the premium where you would get back the unused portion.3 Remember this bogus fee as it’ll come back to haunt me.

Part 2: Our insurance skyrockets

Our experience with Homeowners of America was a jolly good time until December 2022 when our policy auto-renewed at a rate of $1,009.

This, of course, is the oldest trick in the scammer’s book: reel you in with a sweet intro rate, then reach deep into your pockets to make up for their initial loss.

Which reminds me of the Mitch Hedberg skit:

So it said, “You can have this product for four easy payments of $19.95.”

I would like to have a product that was available for three easy payments, and one fuckin’ complicated payment!

“We ain’t gonna tell you which payment it is, but one of these payments is gonna be a bitch. The mailman will get shot to death, the envelope will not seal, and the stamp will be in the wrong denomination; good luck, fucker! The last payment must be made in wampum!”

Here’s what our policy looked like when renewal came around:

CoverageLimits of LiabilityPremium
Coverage A. Dwelling$265,640$678
Coverage B. Other Structures$26,564INCL
Coverage C. Personal Property$159,384$54
Coverage D. Loss of Use$53,128INCL
Coverage E. Personal Liability$300,000$25
Coverage F. Medical Payments$5,000$10
Increased Replacement Cost25% of Coverage A$34
Service Line Coverage$15
Refrigerated Property Coverage$10
Personal Property Replacement
Cost Loss Settlement
$54
Residence Glass Coverage$9
Constant or Repeated SeepageINCL
Fully-earned MGA fee$120
Total$1,009
DEDUCTIBLE 1: Windstorm, hurricane, hail,
and wind-driven rain
1% - $2,656
DEDUCTIBLE 2: All other perils1% - $2,656

Woah, Nelly. There’s a wake up call.

Partly due to inflation, our Dwelling coverage limit increased to $265,640—an increase of $36,640 or 16%—with a corresponding $289 increase in the premium.4

The $289 jump is an increase of 74%5! The extra $36,640 of coverage would cost us nearly as much as our entire $229,000 worth of coverage the year prior.

And the increase in the Dwelling coverage limit had secondary effects as well.

Since the Personal Property limit was set to 60% of the Dwelling limit, it increased from $137,400 to $159,384, and the premium increased by $26.

Our deductibles were affected too as they were set to 1% of the Dwelling limit—they increased by $366.

Then the Increased Replacement Cost—which boosted the Dwelling limit by 25% to $332,0506—jumped from $18 to $34, costing us $16.

And the Personal Property Replacement Cost Loss Settlement and Residence Glass Coverage went from being included to costing us $63.

Finally, the bogus MGA fee, to no one’s surprise, increased by $25.

But, hey, the nice people at Homeowners of America aren’t all bad—they threw in the Constant or Repeated Seepage coverage for free instead of charging us $9.

In total, these various changes increased our annual policy premium by $410.

Part 3: Making our insurance reasonable again

I put off dealing with this until the 4th of January, when my righteous rage compelled me into action.

I called Progressive as I had my car insurance with them and asked about home insurance to see if I could get some extra discounts by bundling.

The rep said Progressive wasn’t offering home insurance in my area, but they got me a quote through Nationwide for $705.39.

The coverage was as follows:

CoverageLimits of LiabilityPremium
Coverage A. Dwelling$265,640$?
Coverage B. Other Structures$26,564$?
Coverage C. Personal Property$199,230$?
Coverage D. Loss of UseActual loss sustained (not to exceed 24 months)$?
Coverage E. Personal Liability$300,000$?
Coverage F. Medical Payments$5,000$?
Biological Deterioration or Damage$10,000$?
Brand New BelongingsApplies$?
Building Ordinance or Law10%INCL
Inflation ProtectionAppliesINCL
Landlord’s Furnishings$2,500INCL
Loss Assessment$1,000INCL
Water Backup Limited$5,000INCL
Tools / Jewelry and Watches / Firearms / Silverware$2,500 each categoryINCL
Total$705.39
DEDUCTIBLE 1: Wind and rain1% - $2,656
DEDUCTIBLE 2: All other perils$2,500
DEDUCTIBLE 3: Water Backup$2,500

Nationwide doesn’t break down the cost of each item in the policy so it’s hard to do an apples-to-apples comparison. The policy comes as a package and it’s not possible to remove coverage we’d never use, such as landlord’s furnishings or coverage for jewelry, watches, firearms, silverware, etc.

One nice thing, however, was that our Loss of Use coverage went from a fixed amount ($53,128) in the Homeowners of America policy to the actual cost incurred. If something happened and we weren’t able to live in the house while it was being fixed, our expenses would be fully covered for up to 2 years. Likely not a huge deal, but a small improvement nonetheless.

The Nationwide policy would save us $183.61 over the course of the year—instead of the full $303.617 due to the lovely $120 “fully-earned” MGA fee—and I took it.

I called Homeowners of America that same day and cancelled the home insurance policy. Two weeks later, a check arrived in the mail for $843, the refund for the unused portion of the premium.8

Part 4: Optimizing our insurance

I knew there was more to be saved, however, and after resting for a bit and regaining my money-saving energies, I called Nationwide again on January 15.

After talking to a few different reps, I was able to get a smoke and fire alarm discount which had been missed originally. This saved us a whooping $2.

I also enrolled in their smart home program and saved another $13. All we had to do was install some sensors9, which they sent us for free.

The big savings, however, came from lowering our Dwelling coverage limit down to the minimum ($214,086) Nationwide allowed.

This automatically lowered our Other Structures and Personal Property coverage limits, as they are set to 10% and 55%, respectively, of the Dwelling limit.

The decrease in coverage for Other Structures didn’t concern me as we only have a fence outdoors.

Neither did the decrease in Personal Property coverage concern me, for two main reasons. One, we don’t own too many things and the limit was still more than enough. And, two, I’d originally opted in for the Brand New Belongings offering from Nationwide and the decrease in coverage didn’t remove this.

The Brand New Belongings feature turns the Personal Property coverage into replacement cost rather than actual cash value. So if some covered accident occurred and my two-year-old computer monitor was damaged, I’d get enough money to buy a new one (replacement cost) instead of getting the current, depreciated value of the monitor (actual cash value).

I was worried, however, about the decrease in our Dwelling coverage limit. We had effectively gone from $332,05010 of coverage down to $214,086.

To remedy this, I added the Dwelling replacement cost plus-150% coverage. This coverage boosts the Dwelling limit by 50%, taking it from $214,086 to $321,12911, almost the same as what it used to be.

From what the rep said, this extra coverage only added about $8 to the annual premium.

These three changes (smoke and fire alarm discount, smart home discount, and decreasing the dwelling limit but opting in to the 150% boost) lowered our annual premium down to $624.75, a decrease of $80.64.

Here’s what these changes to our policy amounted to (all other coverages stayed the same):

CoverageLimits of LiabilityPremium
Coverage A. Dwelling$214,086$?
Coverage B. Other Structures$21,409$?
Coverage C. Personal Property$160,565$?
Dwelling replacement cost - 150%50% of Coverage A$?
Total$624.75
DEDUCTIBLE 1: Wind and hail1% - $2,140

*Note: Personal Property coverage is 55% of the Dwelling limit plus the boost from the Brand New Belongings coverage.

Part 5: One last optimization

I called Nationwide again on January 28 to see if there was anything else I could do to lower the premium.

I went through my policy with the rep and these were the potential savings we found:

  • Removing Brand New Belongings would save $57.
  • Doubling the deductibles would save $65.
  • Decreasing the Medical Payments coverage would save 19 cents.
  • Decreasing the Personal Liability coverage would save a dollar.
  • Moving my car insurance to Nationwide would save $106.

While the savings from removing Brand New Belongings and doubling the deductible were decent, they weren’t big enough to make up for the decrease in coverage and increased risk we’d be taking on.

And decreasing Medical Payments or Personal Liability coverage, needless to say, made no sense.

This left moving my car insurance to Nationwide as the only viable option.

I got a quote from Nationwide that same day and after thinking it over, I decided to make the move. On the 2nd of February I cancelled my existing policy with Progressive and moved it to Nationwide.

This saved us $30 a month on our car insurance and allowed me to get the $106 “bundling” discount on the home insurance, lowering the premium from $624.75 to $518.13.

It was a double whammy because the bundling discount worked in both directions—we got a discount on the home insurance for bundling the car insurance and a discount on the car insurance for bundling the home insurance.

Summary

So there we are. Over the course of a month, I lowered our home insurance from $1,009 to $518.13, without any decrease in coverage. If I sound slightly proud, it’s ‘cause I am.12

I knew absolutely nothing about home insurance at the start of the year and I’m now knowledgeable enough to fend for myself. It’s not difficult—it just takes time. I probably spent around five hours researching and another three or four on the phone with Nationwide.

My tips:

  1. Understand your home insurance; know what each coverage is for and how it affects your premium. This post should help you.
  2. Get a few different quotes. I got quotes online from Liberty Mutual, State Farm, and Lemonade. Since they were considerably higher than Nationwide, I didn’t bother calling.
  3. Bundling your home and car insurance can yield nice savings. Insurance companies provide these savings as the more insurance you have with them, the less likely you are to switch. Take advantage of this.
  4. Don’t be afraid to ask questions. I talked to five to ten different reps from Nationwide. If I sensed they were getting annoyed, I said, “Thank you,” and called back to get a different rep. (This backfired once as I got the same rep when I called back—she recognized me and I panicked and hung up.)

    Different reps can be more knowledgeable or more willing to help. One rep realized the smoke and fire alarm discount was missing. Another got me enrolled in the smart home program. Another explained to me what each coverage was for. Another gave me the tip about bundling car insurance. And so on.

I won’t lie—dealing with this was a pain in the ass. It was tiring and I threw a temper tantrum or two. Or three.

But I saved $500, learned some things, and got to write two posts for the blog. So all’s well that ends well.

I hope this post was useful—may you avoid “fully-earned” MGA fees and getting the same rep when calling back to ask more questions.

Footnotes

  1. Home insurance is required by the mortgage lender until the loan is paid off rather than by law. Once you no longer have a mortgage, you’re free to do as you wish, though home insurance likely remains a good bet.

  2. MGA stands for Managing General Agent. I haven’t been able to figure out what they do. I’m fairly sure this is one of those bogus fees whose sole aim is to extract some extra dollars.

  3. So with the $599 premium and $95 fully-earned fee, if I canceled the policy halfway through, I’d get back ($599 - $95) ÷ 2 or $252.

  4. $265,640 - $229,000 = $36,640, $678 - $389 = $289, and $36,640 ÷ $229,000 = 16%.

  5. $289 / $389 = 74.29%

  6. $265,640 x 1.25 = $332,050

  7. $1,009 - $705.39 = $303.61
    $303.61 - $120 = $183.61

  8. We had the new policy for 19 days. ($1,009 - $120)/365 x (365-19) = $842.72.

  9. Nationwide uses sensors from Notion. The sensors can measure temperature, listen for alarms going off, and detect if a door or window was opened.

  10. This is the base coverage of $265,640 plus the 25% of increased replacement cost coverage in our 2022 policy with Homeowners of America—$265,640 x 1.25 = $332,050.

  11. $214,086 x 1.5 = $321,129

  12. Why, yes, I would like a cookie.