How I Saved Over $300 On My House Insurance
When I recently received my homeowners insurance renewal documents, included was a letter explaining why the rate was increased. It stated how “severe catastrophic events worldwide continues to be a leading cause of loss for insurance companies,” blah, blah, blah.
“So what” I thought, “I don’t live in a hurricane/earthquake/tsunami prone area. What does this have to do with me?”
Related: How Prepared Are You If A Disaster Strikes?
Often with huge increases our first instinct is to start shopping around at other insurance companies. While it’s not a bad idea to compare rates, you should first review your coverage with your existing company. Many times they’ll offer discounts for long term loyal customers.
How I Saved On House Insurance
By spending about twenty minutes on hold with my insurance provider (while working on a couple of on-line jigsaw puzzles) and discussing the policy with the helpful agent I saved over $300 on my house insurance – ka-ching! – and, as an added bonus, I saved almost $50 on the car insurance.
Well worth my time and effort. Here’s how I did it:
Update your information
The first thing I noticed was the replacement value of the house was about $100,000 too high. The amount should be the cost to rebuild – not the market price. Don’t include the land value.
Next showed the age of the roof and heating to be 33 years (the age of the house). The roof, furnace and hot water heater were upgraded within the past five years. They also gave credit for the carbon monoxide detector.
Related: ecoEnergy Retrofit Program
Other changes that could affect your premiums are:
- Getting married (except Nova Scotia)
- Improved credit score
- If you’ve stopped smoking
- If you’ve lived at the same residence for a certain number of years
- Impact and fire resistant roofing
- Taking in boarders
- Having a business on the premises
The agent even asked me if I still had three cats. I don’t know the relevance of this, though – I forgot to ask.
Don’t under-insure
One mistake made to reduce costs is to under-insure. Make sure you take replacement value for your furniture and belongings. If you live in an area exposed to certain risks – hail is a big one where I live – make sure you pay the extra premium.
The extra $15 we paid each year for water damage coverage was especially appreciated when our basement flooded a few years ago and everything was rebuilt and/or replaced.
Purchase special endorsements to cover the full value of expensive jewelry, artwork, antiques etc. as these are subject to coverage limits on the standard house insurance policy.
If you have a lot of add-ons that increase your total you can offset part of the cost by raising your deductible to $500 or $1000.
Have sufficient savings in your emergency account to pay it. Most homeowners have very few claims. I’ve had only two claims in over 35 years.
Often with a large claim – like my flood – deductible amounts are not even charged.
Final thoughts
Homeowners buy insurance to protect against disaster. But when disaster strikes your insurer might not live up to your expectations, especially if you have a large claim.
Make sure you read your policy every year to see what is included, and how much is covered. New discounts could apply to your new life situation if it has changed. Only pay for what you need, but don’t under-insure.
Related: How Much House Can I Afford?
Switch insurance providers if you can get a better price, but if you choose to stay with the same provider, be willing to negotiate. Go with the product that’s best suited to your needs at a price you can afford.
Way to go on reducing your policy. Keeping our policy reasonable is a never-ending dance with our insurer.
Just a quick note, though. In many places, it may take a bit more than just telling the agent things are newer to get a reduction. In Florida (and many other places prone to storm damage), you need to have a professional roofer provide a Wind Mitigation report (~$300) or a Roof Life Certification (~$100) in order to qualify for discounts or maintain coverage. These usually end up paying for themselves with discounts, but it definitely eats into the savings if you have to do too many inspections.
@Mrs Pop: It’s understandable that insurance companies would want confirmation in some instances.
Several years ago my agent didn’t believe I had a perfect windshield – not even a ding. I had to drive to his office to show him. It didn’t cost anything but was kind of inconvenient.
I suppose you need to weight the cost of an inspection against the discount you may to receive to see if it’s worth you while. At the very least you’ll have the satisfaction of having a safe house.
A couple of years ago,I lowered the replacement value which lowered the premium, but I offset that with some changes on some of the other items, like increasing our water damage coverage as well as our medical liability coverage. It about evened out in terms of the premium, but I think it made for coverage that was more in line with our needs, which is what it’s all about.
@Money Beagle: You need to make sure you have the proper coverage. There’s nothing worse than thinking you are covered and getting less than you expected.
One of my friends had her house broken into and her expensive jewelry was stolen. She was even more upset when she found out that the insurance would only reimburse less than half the value.
It’s all about paying attention to detail. I never would have thought to have the house insured at the rebuild price vs market, that is a good way to save a few more dollars. But the first thing to remember is you have options. It may seem like a hassle to go through all these things instead of just paying the bill, but it is worth it in the long run. Anything extra we save can always get saved and invested so it can take advantage of the most powerful force in the universe…compounding interest.
@John: Too many of us just go ahead and pay the bill, especially if you’ve been with the company for a long time. Even if you don’t think you have any changes to your situation it’s worth it to talk to an agent. They have the template right in front of them and will ask questions.
It never occurred to me that the CO detector would make a difference and I wouldn’t have mentioned it if he hadn’t asked. They also change their policies from time to time. You won’t know about additional discounts if you don’t check.
Or if you live in an old wooden house like mine, in an area where over the past decade we have seen some fires…
The stone foundation doesn’t need to be insured, but the rest of the house and furnishing sure do.
One key thing is to also have off-site copies of everything critical. For instance, digital copies of irreplaceable photos and occasional computer back-ups.
@David Leonhardt: Good idea to have off-site copies and a record of what you own.
I learned this the hard way when our basement flooded and not everything that was tossed was itemized by the clean up crew. It was hard to remember what we had!
That is awesome. It would be nice to save hundreds of dollars from something like this. Okay, I’ll go and see if there are any room for savings in mine.
@KC: I’m glad you found it helpful. Good luck!
I used to think home insurance was just a necessary evil, until a home up the street had a fire. They had a window a/c unit that somehow started the fire. No one was hurt, but they were unable to live in the home for over a month while it was entirely re-drywalled etc due to the water damage from the fire fighting. Their insurance paid to rent them a house to live in, etc. (They are a 3 generation family of 7.) I hate to think how they would have managed without insurance.
So now while I don’t like paying, I am more aware of how important it really is to be insured.
A good thing to check, too, is how much coverage you have if someone gets hurt while visiting your home. You probably want at least 1,000,000 in coverage. Many policies will provide this at no or low cost, but it may not be automatically included.
@Bet Crooks: I also hate to pay. As I mentioned I’ve only had a couple of claims over the years – but they were big ones so that’s when I’m glad I have the coverage.
It saddens me when I hear of renters losing everything because they neglect to buy tenant’s insurance.
Liability protection for visitors injured in your home, or damage that you, your children or your pets cause is usually standard for about $100,000. You may want to increase it – especially if you have a home business.
You can also check to see if your policy includes unexpected losses – unauthorized use of credit or debit cards, for instance.
How does one determine how much it would cost to rebuild?
@Joy: I’m going to say that the insurer will know. That’s why they ask you all those questions. They can determine it from your market value, size of home, materials used, etc. I have even been asked the size of my entry.
One of the biggest problems with insurance is not updating information. It will hurt you significantly when and if you have a claim.
@krantcents: Not updating and misrepresenting (I won’t say lying about) your information could result in the entire claim being denied. That’s too much of a risk.
I’ve been pretty fortunate with my insurance. While I’m a little more proactive than most people, my insurance broker is constantly reviewing my policy and suggesting ways to increase coverage in one area and decrease in another area while keeping the premiums the same (and once lowered) to meet my changing needs and is competitive with other insurers. She always follow up with me twice a year to make sure that I’m covered and that nothing major has changed with me. Best broker that I’ve ever had. That’s another reason why I won’t switch. I will miss her when she retires in 5 years but is currently training her protégé to take over and her ideals is very much the same.
@Boomer We are about to finalize our new-build home. The closing date is at the end of June. Any advice for first-time home buyers looking for home insurance? Does having the Tarion Warranty impact the insurance cost at all? Is there much difference in insurance costs/requirements for new-build homes vs. buying a re-sale home?
Thanks as always for the advice and great columns!
@Bryan: I have to admit I didn’t know what the Tarion Warranty is and I had to look it up – it’ s a new home warranty program in Ontario. This wouldn’t affect your homeowners insurance except for the cases where the builder is liable for any claims under the new home warranty. Deal with them first.
The advantage to owning a new build home is in the new, more energy efficient and improved materials used vs older homes so, in my opinion, that should reduce your insurance costs.
As always, shop around for rates and work with your agent for the best coverage for your needs.
To be honest, you’re not the only one that had to look it up. Thanks for the the update.
Having a mortgage registered against the policy increases the premium. Once the mortgage is paid, you need to have the bank notify the insurer that the mortgage is released. I received a cheque for $150 rebate (mid policy) from the insurance company once I updated it of this change.
@BC_Doc: I didn’t know this. Thanks for the info.