The cost of Home Insurance is based on the value of your property and accordingly the premium that you have to pay is calculated. However, this does not mean that you can not save money on your home insurance.
Here are some tips that will help you reduce the burden on your home insurance premium:
#1. Never let your home insurance cover get annulled.
What happens if you cease to have your home insurance on your mortgaged property?
The mortgage company will then insure the property so that they do not face any loss in case of any damage to the property. This insurance will cost you more than three times your regular insurance and it will be added to your premium.
If you can simply avoid such situation and keep your property covered at all times; you can save thousands of dollars by paying only a reasonable amount of insurance premium.
#2. Compare Insurance cost before finalizing an Insurer
It is a good idea to shop around, not just for prices but also the services rendered. Insurance companies have become very competitive and you can find better deals if you check out several prominent Insurance companies.
Check the advertisements and listings, seek opinion from your friends, visit the National Association of Insurance Commissioners website as well as browse consumer guides. Interact with the company’s agents.
Often you will stumble across a deal that gives you better options and results in a saving. The time and effort will be well-spent should you come across an option that helps you in considerable saving.
#3. Negotiate for discounts
Often the companies offer discount for what they see as considerable reduction in risks. For example, a home near a fire or police station means less or minimal risks in case of burglaries or fire. Same goes for homes in better crime-free neighborhoods. There are also discounts for senior citizens or retired homeowners
Joining in some group insurance, home or employer associations would also bring in some relief by way of discounts. So look for these avenues which will help you minimize your premium outgo.
#4. Increasing the Deductibles
When you increase the deductibles, the insurance company knows that you are not going to make frivolous claims. So if you can raise your deductibles, you are liable to get the benefit of reduced premiums.
For your information, ‘deductibles’ refers to the amount of money that you have to pay first, before you can claim the insurance money. In plain terms, if your deductibles are $2000, and the damage to the property costs $5,000; then you have to pay $2,000 first, then the company will pay the remaining amount.
So if you have a higher deductible in areas which are prone to certain perils like windstorm, earthquake etc. and there is a recurrent damage to the house, the company knows that you will pay for these first and the excess may not be very substantial. That is why they are willing to reduce the premiums.
#5. Consider the significance of rebuilding costs
The cost of your house is not the cost of rebuilding it again. So avoid insuring it to the extent of full cost of the house.
To illustrate this, suppose you bought your house at the cost of $120, 000. Then if you rebuild the house, it may actually cost less.
This is because in the total cost, the cost of the land is also included. However, the land will not be destroyed in case of a fire or flood. So reducing the insurance to that extent will surely help in reducing your premiums.
A few other tips that might also help you are:
- Buying from the same insurer your home and auto policies might make you eligible for some discounts
- Making your home safer by installing home security systems, fire alarms and sprinklers etc. may reduce your premium.
- Maintain a good credit history or continuing with the same insurer will also help you get a discount over your premiums.