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Free money is always a good thing. And you can go and find some with just a bit of effort if you shop around your insurance coverage. In most cases, if you haven’t repriced or reviewed your homeowners insurance in the past two years, you’ll be able to find some ways to cut.
You could be overpaying, and a survey from Insurance.com says it’s because 84 percent of people don’t fully understand it.  A quarter of people haven’t even read their policy, which could mean they’re missing out on some of the benefits of their insurance.
The survey also finds that one-third of customers don’t shop around for their homeowners insurance policy – one of the easiest ways to cut costs.
Here’s a rundown on homeowners insurance, what it does and doesn’t cover, and some of the most effective ways to save.
What is homeowners insurance?
Homeowners insurance is coverage for damages to your house and some of your belongings inside, according to Nationwide.  It’s often a required purchase to qualify for a mortgage on your home, and it might save you quite a bit in the case of some (but not all) emergencies.
In addition to damage, homeowners insurance can help you pay for accidents or injuries that occur on your property.
Ways to save on homeowners insurance
If you’ve made some changes to your home or behavior, you can uncover additional discounts.
Did you quit smoking last year? Move into a gated community? Do you live within five miles of the nearest fire station?
Those factors – and many others – make you a safer bet for your insurance company. Meaning, you can get a significant discount on your insurance premium. Something as simple as installing deadbolt locks and smoke detectors could nab you a discount of as much as 5 percent, experts note.
Here are some other ways to save on your homeowners insurance…
Improve your credit score
You probably know a poor credit score can launch your mortgage rate sky-high. Did you know it can do the same to your homeowners insurance rate?
“If you have a fair credit score, you may pay 36 percent more for home insurance than someone with excellent credit,” concludes a study by InsuranceQuotes.com.  “What’s more, if you have poor rather than excellent credit, your premium more than doubles, increasing by an average of 114 percent.”
Is your credit rating holding you back? Find out how to fix it.
Actually, those are just averages. The size of the financial hit varies by state, as you can see here…
If you want a shock, look at South Dakota. A poor credit score there can hike your homeowners insurance rate by a stunning 288 percent.
The InsuranceQuotes.com study relied on something called credit-based insurance scores.
“Credit-based insurance scores are used by almost every insurance company in the nation because it’s a very good segmentation tool,” says Lamont Boyd, an insurance underwriting expert at FICO, which keeps the best-known credit scores of them all. “It’s such a powerful tool because it is very, very predictive of future losses.”
In other words, if you have a low credit score, you’re more likely suffer more insurance losses. That means you’re a more costly client, so insurers will charge you more.
The flip-side is also true. If you want to save up to two-thirds on your homeowners insurance and more, bulk up your credit score.
Most of your FICO score is based on just two factors. Your payment history (35 percent) and how much debt you owe (30 percent). If you pay your bills on time and lower your overall debt, you can raise your score and save big on a range of financial tools.
Of course, that’s easier said than accomplished. If you struggle with debt already, it might be time for an expert opinion. Credit counseling is free and can point you to a path out of debt. What’s the catch? Well, it’s not a catch but it is a drawback in our fast-paced society: There is no quick fix.
It probably took you a while to get deep into debt, so getting out will take at least as long. We’re talking months and even years. However, during that time, you can see marked improvements in your credit score.
Bundle your insurance coverage
Most companies want as much of your business as they can get. So, look for significant discounts when you bundle your coverage with one insurer. The savings can vary from 5 percent to 15 percent off your premium. A bundled policy also may mean that your deductibles are bundled, too, so that anything you shell out for a car or home repair counts against one overall deductible threshold.
Make your house a fortress (sort of)
Next, consider the fact that the more you limit your insurance company’s losses, the less the company needs to charge you. Insurance is all about betting on risk, so lower your risk of having a bad experience.
You can do that by installing fire, smoke, burglar alarms or any other home monitoring system. That lowers the risk that your insurance company will need to write a check.
Using “impact-resistant roofing products” on your home can cut your bill, and there are many types of shingles and roofing systems that qualify. This may not be a primary consideration when you buy a home, but if you’re re-roofing your existing dwelling, check with your insurer. Adding impact-resistant roofing means you can earn a 5 percent to 10 percent discount on your homeowners premium.
What does homeowners insurance cover?
If a major storm knocked out your power and everything in your freezer went bad, your homeowners may cover the cost of the spoiled food. And if the stash of emergency cash in your sock drawer went up in flames during a fire, your policy could replace your burned-up bucks.
These are just a few of the little-known – and frequently overlooked – built-in homeowner insurance benefits.
When you think about buying a homeowners policy, you’re typically worried about replacing the house if it catches fire or has the roof torn off during a severe storm. But a comprehensive policy does more than that, including coverage of your contents and personal possessions and protection from lawsuits and liability if an accident happens on your property.
What may be covered in your homeowners insurance policy:
Medical costs for injured guests
Hotel costs after disaster damages to your home
Legal costs if you’re sued
Items you’ve borrowed or rented that are in your possession
Items stolen from your car or hotel room when you’re off premises
Damages your kid causes to your neighbor’s property
Even dog bites (Lawsuits involving dogs attacks cost an average of around $30,000.)
To see what else is covered in your policy, call your insurance agent. You might just be covered for a cattle stampede or a volcano.
What does homeowners insurance not cover?
Half (51 percent) of homeowners have had a home emergency in the past year. But 34 percent only have $500 or less set aside for an emergency now, says a study from home repair services company HomeServe USA. 
Many Americans assume their homeowners insurance will cover most emergencies. Unfortunately, that’s not true. Homeowners are confused about what repairs they’re responsible to pay for.
Forty-two percent aren’t aware they’re responsible for the costs of repairing a water or sewer line running through their home, the study says. And 13 percent are under the impression that the city would cover the costs. Another 11 percent wrongly assume that homeowners insurance will foot the bill, while 18 percent don’t know who’s responsible.
“It’s easy to assume that the homeowners insurance we pay into will be there to help in any emergency repair,” says Tom Rusin, CEO of HomeServe USA. “In fact that’s not the case in all situations.”
For cases of emergency, you should have savings prepared. Here’s a few things your policy probably doesn’t cover, according to Policy Genius: 
Brian O’Connor is an award-winning columnist. He wrote for the Detroit News, was the founding managing editor of Bankrate.com and now writes for Debt.com and Entrepreneur among other outlets. In addition to winning three humor-writing awards from the National Society of Newspaper columnists, he is a two-time Best in Business winner for his column, as well as an awarded finalist in the Scripps Howard National Journalism Awards and winner of the Christopher J. Welles Memorial Prize from Columbia University.
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