Home insurance, either for the house itself or for its contents, can be expensive: but not as expensive as the mistake you’ll be making if you don’t take insurance and suddenly need it. Luckily there are some tweaks you can make to your policy that will help you cut your premiums.
1. Purchase a less expensive house
It’s odd to think of it this way, but when you purchase any big ticket item, like a car or a house, you should consider the cost of insurance as part of the overall price tag. That way you can best work out what fits into your budget. Less expensive houses are less to insure because the insurance company is facing lower claims. Of course an inexpensive house in a high crime area is going to cost more to insure, so …
2. Live in a low risk area
When you purchase your policy, your agent will take into account many factors, including of course, the likelihood of a break in. If you live in a high crime rate area, it will be reflected in your rates. Sometimes we don’t get to choose where we live, so the best we can do it to…
3. Add security measures, like window bars and gates
Actually, some insurance companies in certain areas won’t even give you insurance unless you have barred windows. If you don’t have them, consider installing them to reduce your premium for theft protection. It may seem like a big expense now, but it will save you money every year. If you can install gates to your property, this will also decrease your premiums.
4. Purchase a home without additional risks
Some home features are higher risk than others. A thatched roof, for example, is a high risk for fire damage. Not only is it more likely to catch on fire, but once on fire it will spread quickly. There are other building materials that pose a higher risk for both roof and walls. Do a little research before you purchase your house.
5. Exclude coverage, like burglary and theft
If you are really short of cash, you may consider excluding certain types of coverage, such as burglary and theft. This leaves you financially vulnerable, so consider whether you could really afford the losses you are accepting responsibility for. You may also opt to exclude flood coverage, but this is not advised. If a flood destroys your house you will still be responsible for paying off the loan while at the same time trying to rebuild your life. That is a heavy risk to take.
6. Increase your excess
If you can afford to pay a higher excess, go ahead and raise the excess on your policy. Doing so will lower your premiums significantly. Having a high excess means that you pay a higher initial amount in the event that you make a claim. You can manage the risk associated with having a high excess with self-insurance risk management. You will have different excesses associated with different parts of your policy. You can set aside an amount of money sufficient to pay off any one of those excesses. Chances are you won’t be claiming under fire AND theft, so you will only need to pay one excess at a time.
7. Don’t make trivial claims
Insurance is meant to be used under extreme circumstances, or in the event of an emergency. It is not going to help your premiums at all if you use your home insurance every time the slightest little thing happens to your property. That will classify you as a high-risk to the insurance company, and they may raise your rates in subsequent years. As an incentive, many insurers offer a no-claims bonus after a few years. So save your claim forms for when you really need them.
One of the worst ways to save money on your home insurance is to under-insure your property. Under-insuring leaves you at high risk financially so don’t do it! Instead use these tips to keep your premiums down as you protect your assets.