June 3, 2010, 4:15 am

Quick Tips To Save On Home Insurance

by: The Financial Blogger    Category: Properties
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This will be moving time for me in less than 2 weeks! We are going to the notary this week and next week and moving on June 12 and 13th. Time flies big time! So it was time to call for home insurance… and try to save money!

Last week, I called my current insurance company to transfer my home insurance to my next property. I always hate going through this process since it takes a good 30 minutes to answer questions on the phone: what is the size of you home? What year it was built? What kind of heating do you have? Etc…

Since I was going to lose so much time on the phone, I thought of taking an additional 15 minutes and ask more questions about how to save money on home insurance. The girl was nice enough (I’m lucky these days to get nice people on the phone!) to answer all my questions. While she wasn’t able to give me a savings estimate according to each tip to save money on my home insurance, I found this conversation pretty helpful.

So here are a few quick tips to save money on your home insurance

Before we start with items over which you may have control, there is one thing you have to take into consideration: the insurance price starts with where you buy. The location of you house is very important. If you buy a property in a area with a higher rate of crime, your insurance will definitely be more expensive.

Credit Score

A few years ago, insurance companies started asking to for access to your credit bureau before giving you a price on your car or home insurance. The reason is quite simple; research has proven that an individual with a great credit score is generally more cautious in all aspects of his life. Therefore, he has less risk of having a car accident or a fire in his house. So when the insurance company requests  your permission to look pull out a credit bureau you are better off saying yes if you know that you have a good credit score. This could help you save a few hundre bucks on your home insurance.

Cost of reconstruction

Based on the size of your house, the insurance company will assume a cost of re-construction if your house ever burns down. Obviously, the higher the cost, the higher the premium. You don’t have to cover the full cost of the price you are paying because you won’t have to replace the land (hopefully!). Therefore, you can try to decrease the cost of construction by $10,000 for example.

Reducing fire hazard

Living near a fire station, having smoke detectors and fire extinguishers will also help reduce your home insurance premiums. On top of that, having extinguisher available at home can be very useful for minor incidents!

Upcoming renovations

If you are buying a house that needs some serious renovations, the insurance company will take into consideration the risk of “rebuilding a part of the house”. If you have trouble with the foundation or you need to replace the roof, you will pay a higher premium.

Alarm system

I always knew that having an alarm system was probably the easiest way to save on home insurance but I had never thought it would be that much of a difference! I would have paid $1,300 per year to be insured without an alarm system. If I get a home security system installed, I will enjoy a rebate of $200 per year! This is 15% off!

I have taken a look at different promotions offered by known alarm companies:

  • Alarm Systems of Canada is offering an system upgrade (DSC control panel with LCD keypad) with installation and programming for only $299 + 6 months monitoring for free.
  • ADT is offering a starting alarm system package for only $99 (internet offer)
  • Safe Tech Alarm System if offering a referral program that may lead to a cheque of $50 for the referee.
  • Alarm Force starts their alarm system package at $25/month, $0 down.
  • Chubb is not offering any current promotions but they are large enough that I felt that I needed to mention them.

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    What happens if for example you “forget” to declare renovations? It could really happen. If things turn bad, will you still be covered?

    I have one concern which would perhaps be a completely different post, or maybe even an entire website. When I shop for insurance, I have a difficult time knowing what to look for. I’m trying to get the lowest price possible of course, but there seem to be many other factors that could influence the decision but I find them very difficult to evaluate. For example, is a certain company more likely to help me out, or offer the reimbursement when a problem occurs. The overall service, etc, etc. The whole insurance world is a difficult one for me to figure out honestly.

    by: The Financial Blogger | June 3rd, 2010 (8:31 am)

    @ IS,
    In fact, if you “forget” to declare anything to a insurance company, you can be sure that they will use this against you. Their business is to assess the risk of hazard on your house and then put a price on it. If you have to redo the foundation and you “forget” to tell them and the house crumble apart during the renovation, I wouldn’t bet that the insurance company will send you a check without saying anything 😉

    This is actually a very interesting topic! most of us are in a black cloud regarding this area. I’ll try to do more research and get back with a new series ;-D

    interesting BMSP. I agree with you. What I want to add is that shopping around can help you know what you want. Discuss with friends and family can help you a lot. You can check online for quotes. You can also check to combine auto and home policies with the same company (see what the company offers). Strange to say but check your alumni association for any deals (talk with them, sometimes it’s advantageous!). Good luck!

    Just to add a couple of things I’ve come across recently…

    If you have paid off your mortgage and have no HELOCs against the property, you can get a discount on your insurance (around $200 for my policy, I’ve been told).

    Also, I think The Monitoring Center has one of the best alarm deals around at $10/month.

    With respect to security system, make sure you also want one because it can be more expensive if you add the monthly cost in some cases. Prices may go up after they get you hooked for a year. Read the fine prints on the contract that you sign. Going with the cheapest is also not always the best option. It depends on where you live too.

    What a terrific idea- paying $25-50 dollars a month for an alarm service to save $200 per year in home insurance.

    Getting an alarm system may be a sound investment in your piece of mind, but it’s hardly an effective way to save money on your home insurance.

    by: The Financial Blogger | June 3rd, 2010 (2:05 pm)

    @ No Communism,

    I never said it was a nice investment. It’s only a good plan if you are planning to get an alarm system but you surely don’t save money overall 😉

    It’s like having a boomerang system in your car, you save on your insurance as well but it’s not the primery purpose of having it installed.

    If you drop your cost of reconstruction and your house burns down, you will be pretty upset about this advice too 😉

    […] Quick Tips To Save On Home Insurance. Are you looking to lower the premium on your homeowner’s insurance? The Financial Blogger gives you 5 quick ways to lower your insurance bill. [The Financial Blogger] […]

    It really boils down to how much time you are willing to spend on the phone getting quotes.

    Check this out, car insurance related but same difference: I was looking to insure one of my cars. It’s a very old car worth nothing, but it’s a sports car. I called. $3400 a year. I said no. I called the same company the next day, gave them the same info $2700 a year. I called a third time, same company, same info, different rep answered the phone $1400. I said sign me up.

    Same applies for home insurance. If someone different answers, then you get a different price. When you are done answering the questions, ask them what you can do to save money. They’ll often just slice a bit off. “we’ll give you the preferred customer blah blah”. It all depends who answers. If you are willing to spend more time, call back and talk to someone else, and get it down further.

    @ Pete,

    I also have the same feeling sometimes. If you just take a few more hours and call the same companies but talk to different people, you will end-up with a different level of:
    – service quality
    – solutions to your problems
    – fees!