For any homeowner, home insurance is an integral part of not only protecting their home, but also their investment. Mortgage companies will in most cases require some form of home insurance to make sure that their loan will be repaid, if anything were to happen to the property.
Having said that, home insurance premiums can be costly. And sometimes it is out of your hands, if the area you live in is categorised as a high risk area. Many people think that limiting the coverage of their home insurance is the only way they can lower their home insurance premiums. But not only is this a foolhardy option, it is also dangerous.
For example, you decide to limit the disaster coverage on your home. After all, it has never flooded in your area since you bought the home. However, natural disasters are difficult to predict and no doubt it will flood now that you didn’t buy flood coverage. The incremental cost of cleaning up and renovating after a cost are substantially more than the premiums you would’ve paid for flood coverage.
There are simple ways you can work towards reducing your home insurance premiums. Most importantly, shop around. There are so many different insurers out there, with so many different policies, it pays to shop around and compare premiums and coverage. However, always make sure you are comparing similar policies when you are comparing premiums – one policy may be very cheap, but may only cover very basic events or have high ‘out of pocket’ expenses, i.e. excess payments. It pays to look beyond your mortgage provider, at specialist home insurance companies, who may be able to offer lower insurance premiums.
Burglary and theft make up a large component of home insurance claims. Therefore, it pays, not only in terms of protecting yourself and your valuables, but also in lower home insurance premiums, if you improve the security of your home. If you are not sure what to do, consult with your local crime prevention officer or neighbourhood watch program. Showing an insurance company that you have done your utmost to prevent a break-in will result in lower premiums.
If all this fails and you are still not happy with the premiums offered by the insurance companies, consider going for a policy with a higher excess payment. Although you will pay more out of your own pocket, if something happens to your home, you will still be covered for the larger amount.