Most homeowners can save more than $500 a year by switching from their current insurance company to a lower-priced one. Some will save more than $1,000.

We collected annual premiums for sample policyholders for the companies that write almost all of the homeowners insurance business in the seven metro areas served by Checkbook. We found costs vary significantly from company to company. We typically found that annual rates for our illustrative, typical homes range from less than $800 with some companies to more than $2,000 with others.

Which companies will offer you the lowest rates depends on many factors, but in most states companies increasingly use credit scores to set their rates. With many companies, your credit score will influence the rates you’re offered more than anything else. The prices most companies offer customers with poor credit are double what people with excellent credit get. With some companies, the poor-credit penalty more than triples their rates. And insurers increasingly use other secretive and opaque methods to calculate rates.

Because pricing methods and premiums can dramatically change over time, shop around for a better rate every other year or so. But don’t wait until the end of your policy term to shop or switch. If you change insurers, your old company must reimburse you for the unused portion of any payments you’ve made.

Although rates for homeowners insurance depend largely on variables you can’t control, there are steps you can take—besides shopping for the best rate—to minimize costs:

  • Choose a high deductible.
  • Avoid buying too much coverage or lousy optional protection. We review these choices.
  • Limit the number of claims you make.
  • Consider buying your home and auto policies from the same company. Many offer discounts to customers who insure both their homes and cars with them. But keep in mind that such discounts are usually small and won’t make a high-priced insurer a good deal.

Fortunately, you can choose a low-priced company and still get good claims service. We also report on companies’ claims handling service performance.