Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 26, 2020

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Key takeaways...

  • Owning a home could qualify you for discounts on your auto insurance policy in some states
  • According to statistics, homeowners tend to file fewer claims than individuals who rent or live at home with family
  • If you buy a home, make sure to update your address and ask if you’ll save money for becoming a homeowner
  • Moving to a new zip code could change your auto insurance rate because of the claims data reported in the area
  • Buying your home insurance from the same provider could qualify you for discounts on home and auto policies

There are so many advantages associated with buying a home as opposed to renting one.

Instead of paying someone else’s mortgage, you can pay your own mortgage and earn equity in a property that will benefit you in the future. While it does require an initial investment, owning a home can help you build your nest egg so that you can live comfortably in retirement.

Home buyers can build a financial portfolio, reduce their taxable income, and take advantage of other liability write-offs.

Not only is it possible to get a bigger tax refund when you own a home, it’s also possible to save money on your auto insurance. As unrelated as home ownership and car insurance rates might seem, the two go hand-in-hand.

Looking to save on your home and car? Compare at least three to four policies to find the best rates for you! Enter your ZIP code above!

Table of Contents

Does buying a home qualify you for auto insurance discounts?

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Some classify purchasing a home as a discount, and others classify it as a favorable rating factor. No matter how it’s categorized, home ownership can save you money on your auto insurance rates.

Not all insurance companies consider your living situation when setting your rates, but it is becoming the standard with many insurers in states where home ownership can be used as a personal rating factor.

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Why do car insurance companies care if you own a home or not?

You might think that it’s odd that your insurance agent will ask you about your living status.

It might sound like an invasion of your privacy, but the agent wants to know if you own a home, own a condo, rent, or stay with relatives for a reason. That reason is that people who own homes fall into a different risk class, according to claims data.

What are auto insurance risk classes?

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There are typically three different risk classes:

  • Preferred
  • Standard
  • High-risk

While the base rate for insurance is the same across the board, it’s your risk class that will cause your rates to fluctuate based on driving performance in the past.

Drivers with several claims or little experience will almost always be high-risk.

If you’re in a preferred risk class, you’re less likely to file a claim than the average driver. If you’re in the high-risk class, you are more prone to filing a claim than the average driver.

A majority of drivers fall into the standard risk class, where premiums fall somewhere in the middle.

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Not All Rating Factors Have the Same Affect on Rates

There are dozens of different personal rating factors that are all used to assess risk. A company evaluates risk when someone is applying for coverage and also when they are calculating a renewal rate.

Even though a lot goes into the rate determination, it doesn’t mean that all of the factors will carry the same weight.

Your driving record, claims history, and vehicle type is important.

Although you can’t expect home ownership, zip code, and prior insurance to have the same exact impact as factors that are directly related to your past experiences behind the wheel.

Even though home ownership is important, it’s not going to break the bank if you’re a renter paying a tenant’s rate.

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Why are homeowners less risky to insure?

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It’s easy to understand why risk would be so important to insurers. After all, it doesn’t make much sense for a company to charge you the same rates as a driver with a history of speeding when you have a clean record.

It is a bit harder to understand what indirect rating factors have to do with driving risk.

As unrelated as home ownership and auto insurance risk seem, the statistics show that the two are closely related.

When reviewing auto insurance claims data and survey responses, insurers have found that homeowners are less likely to file a claim after an accident that results in only physical damage.

Instead of filing a minor claim for damage, a homeowner tends to pay for the damage so that their rates don’t increase.

A homeowner probably has access to cash that can be used to pay for their repairs. They can either tap into the equity of their home or tap into their savings.

While renters can also self-insure, homeowners are more likely to see the benefits of doing so.

Updating Your Policy after You Buy a Home

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Buying a home can be an involved process. It’s especially overwhelming when you’re buying your first property and you have to learn all about loans, inspections, and escrow.

When it’s all said and done, you are excited to take possession of your keys and get moved in.

Obviously, moving all of your belongings to the new home is a priority. You don’t have much time to get settled into the new space before you have to start updating your mailing address with creditors and banks.

Don’t forget to change the address on your auto insurance before your mail forwarding expires. Not only do you need to change your mailing address, but you also need to change your physical address.

A New Zip Code Will Change Your Premiums

Your zip code has an impact on your car insurance rates.

If the insurer didn’t consider your territory, people who lived in areas with high rates of vandalism would pay the same as someone in an area where no property crimes were reported.

When you change your mailing address and notify the insurer that you’re a homeowner, make sure to update your physical zip code as well. There are two different categories in your policy for addresses:

The garaging address is where the vehicle is physically stored or parked overnight, which is the address that will affect your car insurance rate.

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Get a Multi-Line Discount

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Not all car insurance providers sell auto insurance too. If you are buying coverage from a carrier that sells both types of property insurance, ask your agent for a property insurance quote.

If you buy both types of insurance from the same company, you will receive a discount off of your auto premiums and also your home insurance premiums. Ultimately, it’s a great option to combine your policies for added savings.

If you want to see if you’re paying too much for insurance, get quotes today. Comparing the rates through front-runner companies is what helps you find the best deal.

To save time while you’re looking for savings, use an online rate comparison tool and request multiple quotes all at once.

Try our FREE online quote tool and start comparison shopping today to find the best deal! Enter your ZIP code below to begin!

References:

  1. https://www.thebalance.com/how-to-get-a-multi-policy-discount-527535
  2. http://www.investopedia.com/terms/i/insurance-risk-class.asp
  3. https://www.thebalance.com/moving-out-of-state-and-car-insurance-527434
  4. http://www.iii.org/article/how-can-i-save-money-auto-insurance
  5. http://www.investopedia.com/ask/answers/08/multiline-insurance.asp