If saving a few dollars a month on your mortgage payment will make a big difference to you – why not try and lower your home insurance? How would this help your mortgage payment? Because the cost of your home insurance is buried in your mortgage payment. Each payment typically consists of principal, interest, taxes and insurance, known as PITI. You can save hundreds of dollars a year by shopping your home insurance rate.

The tax component in your PITI payment refers to your property taxes, and insurance component is your homeowner’s insurance policy. Your taxes and insurance amounts from your mortgage payment are typically held by the mortgage company in an escrow account. Your property tax is paid out of this escrow account yearly; your homeowner’s insurance is also paid from the escrow account to the insurer every 6 months.

There’s nothing you can do, short of a refinanced or restructured mortgage, about the principal and interest part of your payment. You can talk to the county tax department to get them to reevaluate the value of your home to pay less tax, but reevaluation only happens once a year. You can change your home insurance at any time, which could lower your mortgage payment.

Here are some tips for finding a lower insurance rate:

1. Shop Around. National Association of Insurance Commissioners (www.naic.org) has information to help you choose an insurer in your state, including complaints. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.
2. Raise Your Deductible. A deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent.
3. Buy Your Home and Auto Policies from the Same Insurer. Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.
4. Improve Home Security. You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren’t cheap and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you’d save on premiums.
5. Ask About Other Discounts. Your insurer might not be aware of personal circumstances which qualify you for additional discounts they offer. For example, since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner, too. Retired people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.
6. Reevaulate Insured Personal Property. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies such as expensive jewelry, high-end computers and valuable art work) and pocket the difference.
7. Have Good Credit. Last, but not least, see if you can get a discount for having a good credit rating. If you have bad credit, and are paying higher rates for your insurance, shop around for a company who will not pull your credit report.

Does anyone have any other tips for finding cheaper home insurance? Share them!

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