Purchasing a home is significant investment and owning a home is a big responsibility, but the financial burden doesn’t end with the mortgage payment. One of the costs that new homebuyers often forget to consider is the cost of insurance. When you are considering the cost of a house you want to purchase, take everything into account; property taxes, utilities and homeowners insurance.
Here are some tips to help you save money on your insurance.
1. Tweak Your Deductible.
A deductible is the amount of money you have to pay before your insurance policy kicks in and pays a claim, the lower your deductible is, the higher your yearly insurance premium will be. Most insurance companies recommend a deductible of $500 or more, however if you can afford to raise your deductible to $1,000 for example, you could save as much as 25% on your premiums. This is a great way to save money as long you don’t have too many claims, before making this change, ensure that any necessary upgrades are completed.
2. Clean Up Your Credit Report.
According to many insurance companies, a homeowner’s credit score reflects a level of responsibility. Most Canadian insurance companies operate under the idea that there is a direct correlation between a person’s credit score and the frequency and severity of claims, therefore clients with good credit scores will usually receive the most competitive premium. Having a good idea of what your credit score looks like is a good idea all the time anyways.
3. Upgrade or Update.
Talk to your insurance agent to find out if you can also save money on your insurance by making improvements or upgrades to your home. For example, updating your plumbing and electrical systems to reduce the risk of water and fire damage, installing a home security system, smoke detectors, deadbolt locks etc. Also, what is the condition of your wiring? Do you have breakers or fuses? Is the wiring outdated or damaged? What is the condition of your roof? Has it been updated in the last 10 years? All of those affect your insurance costs and eligibility for insurance. These aren’t cheap updates, so make sure they’ll lower your premium enough to make it worthwhile and that your updates will qualify for the discount.
4. You Better Shop Around.
There is no harm in calling around to other insurance companies to inquire about what your rate would be if you switched to their company. It’s a competitive industry and many companies will offer incentives and discounts to potential customers for making the switch. If you don’t have the time or inclination, you can get an independent insurance agent, who will do the shopping around for you.
5. Don’t Get Over-Insured.
Being under-insured can be a big problem when disaster strikes and you don’t have the right kind of coverage, but be careful that you are not over-insured either, as that will cost you extra money every month. The ideal situation is to have just the right amount of coverage without paying unnecessary premiums. Make it a point to review your policy and your insurance needs annually when you receive the renewal paperwork. Specifically, make sure to review any non-standard insurance. This could be things like expensive electronics, artwork or jewelry. If you no longer own the item, you should have it removed from your policy.
6. Bundle Up.
Some companies will offer a discount on your premium if you purchase two or more types of insurance from them. Inquire about buying any of your; life insurance, homeowners, automobile and liability and whether or not there is a financial advantage to bundling your policies. Taking advantage of this kind of discount can save you anywhere from 5-15%. Just make sure the combined price with a discount is actually lower than buying separate policies from different companies.
7. Location, Location, Location.
When looking to purchase a home, there are a few things to consider regarding insurance. For example the location of the home can affect your rate of homeowners insurance. A neighbourhood with a low crime rate and homes located close to a fire hydrant or fire station will pay lower premiums as a result of decreased risk of break in and fire. Detached vs. Townhouse, in ground pool or pond, wood burning or gas fireplaces, all of these details can affect the type of insurance and amount you will pay in premiums. When you are searching for a new home now, these are things to consider before signing on the dotted line.