Home Insurance – recurrent

Recently, I renewed our home and contents insurance and discovered several ways to reduce the cost of our insurance premium. Here are 5 tips to reduce the cost of your home insurance that worked for me: Tip #1: Increase Your Excess By far the biggest saving you can ever make on your home and/or contents insurance policy is by increasing the excess (otherwise known as deductible). The excess is the amount of money the insurance company will reduce your claim by. For example, if you make a claim to replace an item worth $12,000 and the excess on your policy is $5,000 if the claim is successful the insurance company will only give you $12,000 - $5,000 = $7,000. You would only increase the excess if you had the appropriate amount in savings to cover the cost of replacing the item. This is why it's important to save for an emergency fund to help pay for the replacement of the item. Tip #2: Reduce House Value The next biggest saving was making sure the value of the house was correct. It can be easy to claim a higher amount, but don't forget the purpose of insurance is to be able to get you to replace your living quarters, not to upgrade your home to the Taj Mahal. Use a home value calculator to help determine the actual cost of replacing your home. Look at the standard cost of replacing your home rather than a quality or prestige replacement of your home. Also, if you have substantial savings you might be able to further reduce the value of your home if you could use some of your savings to pay for any shortfall in the replacement cost of your home. Lastly, be wary of insurance providers who don't allow you to enter the value of your home. I noticed one insurance provider only gave me a slider to change the value of my home and I couldn't go any lower than the minimum they had set, and this was 10% higher than the quality value I had obtained from Core Logic! Tip #3: Pay Annually The next biggest saving was paying for the insurance package annually rather than monthly. Again, this would only work if you have the ability to pay for the insurance with your current savings and budgeting. Why is it cheaper? By paying annually the insurance company is not chasing you with any failed monthly payments, and therefore doesn't need to employ admin to collect fees. Tip #4: Package With Other Insurance (Or Bundle) You may find if you have other insurance policies with a provider, such as car insurance, or health insurance, that if the insurance company is large enough, they may be able to provide additional discounts if you decide to package their home insurance together. Be sure to obtain a quote from your car insurance or health insurance provider as they may give discounts to their customers who already have purchased other types of insurance with them. For example, with one insurer I was able to obtain a quote containing a loyalty discount of 12.5% as I had been with them for over 3 years. You might similarly be able to find a discount with your insurer. Lastly, you will find if you bundle your contents insurance with your home insurance it will be cheaper than what it would otherwise be if you purchased both insurances separately. Here's how it looked when I obtained a quote for home and contents insurance separately (NRMA): Insurance TypePremiumHome Insurance$680.92Contents Insurance$286.92Home & Contents Insurance$921.93Saving if bought together$45.91Total saving if insurance policies bundled, rather than bought separately As you can see from this one example, it was cheaper if I purchased the home and contents insurance as one bundle, rather than purchasing the home and contents insurance separately. The difference might not be as great with your provider, but the principle would still apply - it's cheaper to bundle insurance together, rather than having your insurance policies scattered across many different providers. Tip #5: Use Aggregator Don't stay married to a brand, check your insurance against others by using popular insurance aggregators like Compare the Market. See if the insurance premium offered by your provider is the best quote going around. Sometimes you may find other insurance companies have a deal to try and get new customers and this might mean a cheaper insurance premium for you. And the only way you're going to know is by shopping around and seeing what other insurance companies are charging. It might require a little effort, and you might go cross-eyed with all the form fields you fill out, but if it saves you a $50-$200 it will be worth it. Summary If you are obtaining or renewing your home insurance and want to find ways to be able to reduce your premium hopefully these 5 tips will help as they have with my home and contents insurance.