Homeowners' insurance isn't a luxury, it's a necessity. In fact, most mortgage companies won't make a loan or finance a residential real estate transaction unless the buyer provides proof of coverage for the full or fair value of the property (most of the time this is the purchase price).

A burglar alarm that is monitored by a central station, or that is tied directly to a local police station, can help lower a homeowner's annual premiums by 5% or more. To obtain this discount, the homeowner will typically be required to provide the insurance company with proof of central monitoring.

Smoke alarms are another way to reduce your homeowners' insurance premiums. While these are standard in most new houses, installing them in older homes can save the homeowner 10% or more in annual premiums. Some insurance companies will also give further discounts if the you install additional smoke detectors. In addition to premium discounts, in case of fire, they c

Raise Your Deductible
Like health insurance or car insurance, the higher the deductible the homeowner chooses, the lower the annual premiums will be. The catch? Smaller claims such as broken windows or damaged sheetrock from a leaky pipe, which typically will cost only a few hundred dollars to fix, will most likely be absorbed by the homeowner.

Look For Multiple Policy Discounts

Many insurance companies give a discount of 10% or more to customers that maintain other insurance contracts under the same roof, such as auto or health insurance. Consider obtaining a quote for other types of insurance from the same company that provides your home insurance. You may end up saving on both annual policy premiums.

Plan Ahead For Construction
If you are planning to build an addition to the home or a structure adjacent to the home, consider the materials that will be used. Wood-framed structures are highly flammable and will cost more to insure, whereas cement- or steel-framed structures will cost less because they are less likely to succumb to fire or adverse weather conditions.

Beware Of Costly Recreation
Pools and other potentially injurious devices such as trampolines can drive annual insurance costs up by 10% or more. This may seem like a small price to pay given the joy these items bring, but it is still something that should be considered by the homeowner prior to purchase.

Make Regular Policy Reviews
It is a good idea to review your insurance policy at least once a year and compare the costs of other insurance policies to your own. In addition, you should make note of any changes that have occurred that could lower your premiums, including the addition of a burglar alarm, sprinkler system, or disassembly of the trampoline. Neighborhood changes could also affect your rates, such as the addition of a fire hydrant within 100 feet of the home.

Get An Endorsement
Legally speaking, an endorsement is an amendment to the basic homeowner's policy. For example, a woman wanting to insure her diamond ring would obtain a formal appraisal from a jeweler, then send the appraisal to the insurance company for a special notation on her insurance contract. This expedites the claims process and ensures that the homeowner gets the full dollar value of the item if it is lost, stolen or damaged in a disaster.