How to Reduce Your Home Insurance Premiums the Right Way

by James

Opting for a home insurance policy with lower premiums can always come with risks. Your premiums also define important elements of your insurance policy, like coverage limits and deductibles. The higher your deductible or the lower your coverage limit, the more you will have to pay out of your own pocket should something happen to your home.

When you make a fire insurance claim, you will have to deal with a fire claims adjuster. This is someone who evaluates your claim and recommends how much the insurance company should pay out. This person is paid by the insurance company, which is important to keep in mind. Working with the fire claims adjuster can be stressful if you’ve lowered your premiums and reduced your coverage because every dollar counts. You can only fight to get the compensation that matches the coverage you have.

That’s why it’s so critical to make sure you have the insurance policy you need. That said, there are still smart ways you can save on your home insurance premiums.

#1 Renovations

Improvements to your home are a great way to reduce your premiums. Some renovations are more likely to turn into a discount on your premiums. These include:

  • A new roof
  • Wind or hail-resistant windows and doors
  • Fire-resistant shingles
  • Home security systems

Insurance companies often require higher premiums for older homes, as there are several safety concerns with older construction techniques like knob-and-tube wiring. Some insurance companies may even require that these be replaced before they are willing to insure the property.

Of course, given the cost of renovations, it can take years for your savings to pay off the investment. When you’re calculating whether or not it makes sense, don’t forget how these renovations can impact your home value and whether you intend to sell in the near future.

Neglecting essential renovations like roof repair can also put any future claims at risk. The home insurance company might reject your claim outright if you had not taken adequate steps to fix a roof that was more vulnerable to damage.

#2 Budget for the Worst

The key to reducing your insurance premiums is knowing your deductible and budgeting appropriately. If you have an emergency savings fund that covers the cost of a higher deductible, signing up for lower premiums can simply make sense.

If you can afford the higher deductible, it may make sense to add the savings to your emergency fund or to a retirement account, knowing you’ve budgeted for a worst-case scenario.

#3 Review Add-ons

Getting add-on coverage may be the last thing you want to do if you’re trying to save on insurance. But there are certain losses not covered by most standard policies you will likely want, including sewer backup coverage or overland flooding.

When you’re shopping for a home insurance policy, you want to look up flood maps to see if your home is at risk for flooding during extreme weather events. Water damage insurance and flooding insurance are not the same, and overland flood insurance is relatively new to Canada.

As much as it may hurt to add to your policy when you’re looking to save, consider the costs you would incur if a disaster were to happen.

 

Img Credit: jcomp via Freepik

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