Saving Money on Home Insurance

The old truth that ‘every little bit helps’ is especially true when it comes to personal finance. Saving just a little bit of money every month can eventually make a significant difference to your overall financial position. One place where such a saving can be made is in the area of home insurance. Many people are paying way too much for home insurance without realising it. This article is intended as a brief guide to making sure that you are not one of them.

The main ways in which you can reduce your home insurance premiums are the following:

• Shop Around: This is probably the number one way in which people can reduce their premiums. It is unfortunately also the one that is often the least used. Many people erroneously think that researching alternatives would not be worth the hassle or that they are tied to their current insurer by their mortgage provider. Misconceptions like these can cost a great deal of money since it is often possible for consumers to substantially reduce their premium. The reasons for this being the case are varied. It often has to do with new provider bringing innovative products to the market or with the fact that some insurers do not bother to adjust the risk profile of their current clients. Be that as it may – The very first step towards lower insurance premiums for many would simply be to get some quotes from other insurers.
• Combine Policies: It can sometimes (although not necessarily always) be worth your while to combine your contents and buildings insurance (if you are a homeowner) into a single policy. This might create a kind of ‘economy of scale’ in the eyes of the insurer, possibly leading to a lower premium.
• ‘Reconfigure’ your current policy: An easy way to reduce your insurance premiums is to offer to pay a larger excess (the amount that you pay when making a claim). This means that the insurers cost per claim will be reduced in your case, leading to lower premiums. It goes without saying that you should do a proper risk analysis before taking this option since it could cost you dearly should you have occasion to actually make a claim.
• Reduce Risks: Risks assessments are one of the main ways with which insurers determine the level or premiums. If you can reduce risk, you are therefore likely to pay lower premiums. Some of the ways in which you can do this are:
• Improve Security: Fitting extra locks or an alarm system will almost always be look upon favourably by insurers.
• Flood proof your house: If you live in an area prone to flooding you can reduce your premium by installing water resilient doors, waxed floors and one way valves on drain pipes
• Improve Fire Security: You can do this by installing a sprinkler system or another fire extinguishing system.

Not everyone would be in position to do everything described in this article. However doing just some of them already qualifies as some of the ‘little bits’ that can make such a huge difference!

Summary

The four main ways in which you can reduce home insurance premiums are:

• Shopping around for the best deal
• Combining buildings and contents insurance
• Offering to pay a higher excess
• Reducing risks as far as possible