How to Reduce your Home Insurance Premiums


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How to Reduce your Home Insurance Premiums

Your home is one of the biggest investments you'll ever purchase. You worked hard and saved for the deposit, and the mortgage payments eat up a large portion of your take home pay. Some people just miss out on little luxuries, while others do it real tough. Insurance is an essential part of protecting your asset, but there are ways you can reduce your home insurance premiums and perhaps have a bit of spare cash at the end of the pay week.

Reduce Home Insurance Premiums
Increasing your Excess

An excess is the amount you need to pay when you want to make a claim. You might be paying $100 a month for insurance, for example, when your home is damaged in a fire. It is estimated to cost $10,000 to make the necessary repairs. You might need to pay $500 towards this claim - that is an excess (it is usually taken from the payout amount). However if you want to reduce your premium from $100 a month to $75 a month, you might be able to increase your excess to $1,000. It varies from insurer to insurer. It could mean that you're less likely to make claims for small amountsi. There's little point making a claim to replace a $300 window if the excess is $800 (you'll need to pay $800 to get $300 back).

Estimate the value of contents accurately

Try not to over-estimate the price of your household contents. If you 'round up' or add on extra costs, then the total you'll need to insure will increase and your premiums will, too. If the diamond ring cost $550, then don't round up to $600. You may receive $600 if you make a claim, but you'll pay for it by way of increased premiums (if you receive the claim at all - it could be considered fraud).

Installing alarms

Home security is essential for many reasons - it can prevent an unwanted visitor from making off with your belongings, for one - but it can also mean reduced premiums as your insurer will see your home as being less at risk of a break in, and you at less risk of making a claim. Installing security measures such as alarms, additional locks and deadlocks and lockable bolts on your windows will mean you pay less. It'll also mean your home and family are safer.

Consider the area you're buying into

The old adage rings true - you're better off buying the cheapest home in the most expensive suburb, than the most expensive home in the cheapest suburb. However in places such as Melbourne's trendy inner city suburbs, for example, the increase in average wages sweeping parts of the city is not translating to lower crime ratesii. What does this mean? You still need to research where you're buying. Don't think that a pricey home in a nice suburb means you are safe from the unsavoury elements.

It's not only the neighbourhood you need to think about, though. Is your home in a flood area? Is there a risk of fires or earthquakes (however remote)? Crime rates, risk of flood and fire and other factors will increase your premiums, so it pays to investigate.

Combine your policies

If you live on the side of a mountain, the chances of being flooded by rising rivers are slim (but not completely absent). Weigh up whether certain covers are essential for your circumstances. If you don't need earthquake cover, don't take it - and your premiums will be less.

Pay Annually

Paying your insurance premiums yearly instead of monthly will reduce them. Of course, you need the lump sum up front, but over the year it does work out to be substantially less. Make the calculations and see how much you can save by paying annually.

Choose your cover wisely

If you live on the side of a mountain, the chances of being flooded by rising rivers are slim (but not completely absent). Weigh up whether certain covers are essential for your circumstances. If you don't need earthquake cover, don't take it - and your premiums will be less.

Claim History

Do you make a lot of claims? Perhaps you're just unlucky or clumsy. However this can affect your premiums. An insurance company will take into account your claims history and if you've made many frivolous (or even major) claims this could increase your premiums, as an insurer will see you as a high risk of making more claims.

There are many ways to reduce your insurance premiums. It pays to delve into the options available, and asking your insurer what they can do for you.

Home Alarm

i

http://www.canstar.com.au/five-factors-that-affect-home-and-contents-insurance-premium/

ii

http://www.theage.com.au/victoria/housing-up-but-crime-rates-high-20100404-rlnz.html