Insurers competing for auto business for the first time in decades are lowering premiums on homeowners' policies for consumers who buy both types of coverage from the same company. In recent months, some of Massachusetts' largest insurers, including Arbella Insurance Group, Commerce Insurance Co., Liberty Mutual Group, and Norfolk & Dedham Group, have shaved 3 to 20 percent off homeowner premiums by offering bigger discounts on com bined policies.



Massachusetts Insurance Commissioner Nonnie Burnes said last week that she had hoped, in planning to deregulate the auto insurance system, that it would "force insurers to pay more attention to their homeowner rates." She is pleased with the results so far.

Gregory Donovan, a Quincy real estate lawyer, learned that his auto insurer, Commerce, was offering a discount to customers who moved their homeowner's policies to Commerce. Donovan's Westwood home was insured by Travelers of Massachusetts, so he asked his agent to see whether Travelers could match or better Commerce's deal.

For tips on shopping for homeowners insurance, see tomorrow's Homes section.

Travelers offered the same pricing on car insurance for Donovan and his wife's two Hondas. But if the couple gave the company their auto coverage, they would get about a $145 break on their homeowner's policy, bringing the annual premium down to $1,085. "It's just a no-brainer to combine them if you can save," Donovan said.

Before now, homeowner's insurance premiums have gone nowhere but up, rising 9.2 percent last year in Massachusetts, compared with 3 percent nationwide. Since 2000, homeowner's premiums have increased 85 percent in Massachusetts, to $950 on average, compared with a 63 percent increase nationwide, to $826.

These premiums exclude 150,000 homeowners who buy coverage from the state's insurer of last resort, the FAIR Plan. FAIR Plan's rates increased 25 percent in 2006 and 100 percent since 2000.

For the first time in Massachusetts, homeowner's premiums have surpassed the cost of a single automobile policy. Except for the FAIR Plan, premiums on homeowner's insurance in Massachusetts are not regulated.

Auto deregulation, which took effect April 1, brought new competition to the long-dominant auto insurers such as Commerce. To fight back, large auto insurers began offering bigger breaks on homeowner's coverage. Meanwhile, insurance companies with a large presence on the homeowner's side needed to protect their existing business from poaching. So they are reducing homeowner premiums through discounts on combined coverage.

"If Commerce offers a big savings on the car, they're going to suck the homes away," from competitors, said Stacey Souza, office manager at G.V.&Y. Insurance Agency in Westwood

Timothy Hegarty, president of the Norfolk & Dedham insurance company, said his firm increased its homeowner discounts last summer by about five percentage points, to 10 to 15 percent off, in anticipation of auto deregulation; 15 percent is about a $150 savings on a typical policy.

"The catalyst was the change in the auto market - there's no question," he said.

In October, Arbella also increased its discount for homeowner's premiums, from 15 percent to 20 percent. Arbella wanted to keep auto customers while expanding its homeowner's business, said Andrea L. MacKay, vice president. A drop in claims by homeowners during 2006 also paved the way for reductions, she said.

Arbella's larger discount reduced the average homeowner's premium to $699, from $730 last year.

Other insurers that increased discounts include Liberty Mutual and Commerce, while Quincy Mutual Fire Insurance is awaiting state approval to do so. Some insurers are also offering discounts for combined policies for the first time, agents said.