Photo: James Bombales

Many home insurance customers ask what they can do to keep their premium as low as possible. While insurance rates can and do fluctuate over time, there are a number of ways for customers to control their home insurance premium by tailoring their coverage and taking proactive measures to reduce risk. Please note, the information found in this article is specific to Canadian residents.

1. Increase your deductible

Historically, home insurance policies have usually offered a standard deductible of $500. Over time, as property has become more valuable and rates have risen, $1,000 has emerged as the new standard deductible – and in many cases, insurance providers actually surcharge policies in exchange for keeping the $500 deductible. Since insurance is intended to deal with “big” losses, and not for maintenance or small claims, you can usually achieve significant savings by taking a higher deductible.

We suggest that you choose the highest deductible that you would be financially comfortable paying in the event of a loss; this will ensure that your premium is as low as reasonably possible, without putting yourself in a bad position if a loss were to occur. Keep in mind that deductible savings will “plateau” at a certain level, beyond which it won’t make sense to go any higher – speak to your insurance provider to obtain a range of deductible quotes, and choose the one that represents the right balance for you.

Photo: James Bombales

2. Eliminate unnecessary coverages

What if you don’t have a garage or a fur coat? Most home insurance policies include coverage for these things, whether or not you actually have them. Why pay for coverage you don’t need? At Square One, we allow you to customize your policy and eliminate coverages that you don’t need or want to buy, matching your premium to your own needs instead of a “one size fits all” price.

3. Don’t over-insure your belongings

Complete a household inventory checklist. If you only own $60,000 in personal property, you shouldn’t be paying for more. Most home insurance policies insist you insure your personal property for an arbitrary amount based on the value of your home, without consideration for how much you might actually need. This can lead to over-insuring your personal property, which serves no purpose because the policy will only pay for what you actually own. It can also lead to under-insuring, which would leave you out of pocket in the event of a claim. To protect yourself against either situation, complete a household inventory and purchase insurance that meets your specific needs.

Photo: James Bombales

4. Don’t over-insure your home

Insure your home for the amount it would cost to rebuild, not what you paid for it. When you bought your home, you paid the market price for the house and the land. Depending on when you bought, and where you live, that could be significantly higher than the cost to rebuild. If you’re insuring for more, you’re paying too much. Similarly, don’t under-insure your home: while you may save a few dollars in your insurance premiums, the financial impact of inadequate coverage can be crippling if a significant loss were to occur.

5. Don’t claim for small losses

Insurance has always been intended to help you recover from large losses that you can’t handle on your own. For this reason, your premiums will be affected if you make multiple small claims; lost claims-free discounts, and even surcharges, can significantly outstrip the value of small claims over time. If you have a $500 deductible, and lose a $600 television, consider if it’s really worth making a claim for $100. If you have a discount for being claims free, you could lose it, and if you have more than one claim, a surcharge could be applied to your policy.

Photo: James Bombales

6. Keep your home in good shape

If you repair dangerous steps, or replace that rotting deck, you’ll reduce the chance that someone will be injured on your property. Keeping your property safe and sound reduces the likelihood of losses, which means you won’t have deductibles to pay, and you won’t lose claims-free discounts under your home insurance policy.

7. Replace plastic plumbing hoses with braided steel hoses

Water damage claims are by far most significant category of losses paid by insurance companies; rubber and plastic appliance hoses are a major contributor to water losses, because they dry out, bulge and burst over time. One burst hose can create thousands of dollars of damage within a few minutes, and a burst hose while you’re away for a few hours can easily cause tens of thousands of dollars of damage – not to mention the disruption to your lifestyle that follows if your home needs tear-out, drying or partial reconstruction. Protect your home, reduce the chance of a claim, and keep your rates low, simply by replacing hoses!

Photo: James Bombales

8. Update your home

Is your roof nearing its life expectancy? Is that hot water tank over ten years of age, or is it beginning to rust and show signs of wear? Does your furnace have problems or seem to run all the time? Keeping these things updated can prevent a big loss, and may result in a discounted rate from your insurance company.

9. Find an insurance provider who offers free monthly billing

If you prefer to pay your insurance in monthly instalments, you may end up paying more because of financing fees charged by most insurance providers. At Square One, we offer monthly payments without any financing fee or interest charges.

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