March 30, 2012 — One aspect of being a REALTOR® that never ceases to amaze me, even after more than 30 years, is that there are always new things to learn about the profession and the subject of homeownership in general.
I was reminded of this recently when I undertook a renewal on my home insurance. As a number of improvements had been made to my home throughout the past year, I wanted to ensure my coverage reflected potential replacement costs.
Home insurance is a necessary expense for all of us – most financial institutions even require it as a condition of mortgage – but there are many smart approaches to keeping this cost in line while obtaining adequate coverage.
I found that by producing a certificate, which indicates my home has an alarm system actively monitored by a security company, I was able to achieve significant savings on my premium. For many homeowners this may translate into a discount, and more importantly the peace of mind you get from knowing that your house is well protected. Similarly, other security features that may reduce the likelihood of a claim like deadbolt locks, fire extinguishers, smoke alarms and carbon monoxide detectors may also lower the cost of home insurance as well.
New homes, and those with updated electrical, heating and plumbing systems are also more likely to be regarded favourably by insurers, due to the reduced risk of an expensive malfunction.
Location is another factor in determining the cost of a premium. If the home is located near a fire station or water supply in rural areas, savings may be achieved.
Even attesting to the fact that all occupants are non-smokers may result in a reduced premium. A track record of responsible behavior, as demonstrated through a claims-free history and a strong credit rating may also be rewarded.
Increasing the deductible, or the amount the homeowner is responsible for paying in the event of claim is another strategy for lowering a home insurance premium. Similarly, the amount of insurance for personal property can be adjusted, but it’s important to have ample coverage for high-ticket items like jewelry and computers.
Like any other major expense, it pays to shop around for the best insurance quote. While shopping around, homeowners should bear in mind that their coverage should relate to the worth of the structure, not the land value, as it will remain intact regardless of any catastrophe that befalls the dwelling. A professional appraiser can offer a clear estimate in this regard.
It is wise to only switch insurance providers during the policy’s renewal period in order to avoid any penalties and to consider choosing the same insurer for home, life, and auto coverage, as doing so may result in multi-line discounts.
As with all things in life, when it comes to decisions regarding insurance it pays to prepare for the worst, hope for the best, and keep an eye on the fine print.