In recent years, insurance rates have increased in response to changes in the environment and national security. Even though many of us will not be personally affected by erratic weather phenomenon, terrorism, etc., they impact almost everyone who has home insurance. There are several things you can do to ensure that you are getting the best rate possible.
Plan Ahead
If you are shopping for a new home, think about insurance before you make a purchase. The home's claims history will most likely affect your rate, so obtain a copy of the insurance loss history. For example, if the previous owners made a claim for a flooded basement or an electrical fire, the insurance company may charge you higher-than-normal insurance on the home due to the perceived risks. Hire a professional inspector to examine the home and make sure that past problems have been repaired.
Security
Before you choose a neighbourhood, research crime rates in the area. Homes in areas with high rates of crime will require higher insurance premiums than those in safer areas. Regardless of where you live, installing a security system can provide peace of mind and reduce your insurance bill. The best type of security system is one which rings at a law enforcement station. If that is not available in your area, the next best choice is a system that connects to a reputable monitoring firm. A system that merely sounds an internal alarm when a door or window is opened or broken is better than nothing, but your insurance company may not give you a discount for installing this type of alarm.
In addition to a monitored security system, insurers typically offer a discount for safety devices such as:
Deadbolt locks with solid wood or metal core doors
Smoke detectors
Carbon monoxide detectors
Sprinkler systems
Automatic natural gas or water shut-off
By taking these security and safety precautions, you could potentially reduce your insurance premiums up to 10 percent.
Emergency Services
Another consideration when buying a home is its proximity to a fire station and fire hydrants. In rural areas, these may be far away. Close proximity to the fire station or fire hydrants can reduce the response time on emergency calls, which can result in lower insurance premiums.
Upgrade your home
Reduce the risk of fires and water damage by upgrading your heating, plumbing, drainage, and electrical systems, then inform your insurance company. Some insurers may offer additional savings if you add storm shutters and/or install stronger roofing material, particularly if you live in an area with strong winds or the risk of hurricanes or tornadoes. If you have purchased additional coverage for mold (many insurers do not include mold in their standard package), you may be able to reduce your premiums by upgrading the building envelope and drainage of your home.
Quit smoking
Many people have died and many homes have been destroyed by stray cigarette embers and by people falling asleep with lit cigarettes. When cigarettes cause a fire in an apartment complex, the results can be tragic not only for the homeowner but also for unsuspecting neighbours. For these reasons, most insurers charge smokers higher premiums. If you have stopped smoking, be sure to let your insurer know. If you need an even greater incentive, keep in mind that in addition to saving money on insurance, you will save hundreds of dollars every year on cigarettes which may reduce your medical insurance costs.
Deductible
By increasing your deductible you can reduce your monthly premiums. For example, by raising your deductible from $500 to $750, you could save up to 5 percent. Consider whether saving money on your premiums is worth the increased deductible in the event of a claim.
Maintain a Good Credit Rating
Insurance companies have found that people with poor credit are more likely to make insurance claims. Companies use credit-based insurance scores to determine premiums. A person with a favourable credit report will tend to pay less than someone who has a poor credit history. If you are planning to purchase a home in the near future, check your credit history and try to rectify any outstanding issues. This will be helpful when obtaining both the mortgage and home insurance.
Auto Insurance
By purchasing both home insurance and auto insurance from the same company, you may be able to save 5 percent or more on your total insurance payments.
Senior's Discounts
Although you may consider yourself to be far from retirement age, you may be surprised to learn that your insurance company considers you to be a senior! Many insurers provide a senior's discount to people over the age of 55. Seniors are considered to be less of a risk when it comes to homeowner's insurance. They tend to take better care of their properties and because they spend more time at home than working people, thieves are less likely to target their homes.
Location
When choosing a home, be sure to look beyond the landscaping, the view and even the structural soundness of the building itself. Consider the natural elements around and below your home. A home that is built on porous earth will cost more to insure than one that built on bedrock, and it will suffer greater damage in an earthquake. If you live on a slope, there is a risk of a mudslide sweeping away your home. If you choose to live in an area which is situated on a known fault line, there are inherent risks. Most standard insurance packages do not cover earthquakes or mudslides, among other man-made and natural disasters. After assessing the risks, you may determine that they warrant extra insurance coverage. That extra coverage may one day save you hundreds of thousands of dollars.
Clearly, prevention is the best medicine when it comes to buying insurance. By doing your research before you purchase a home and by ensuring that your home is safe and secure for you and your family, you can enjoy lower insurance premiums. [Return to Homeowners Guide]
© Copyright 2006 Sutton Group Financial Services Ltd.
|