Home insurance can be a tricky minefield to navigate, especially if you don’t feel like it’s something that you can afford. And whilst listing the reasons home insurance is useful for you is a whole other article, there are a few tricks and tips that you can employ to dramatically decrease the cost of your home insurance.
But let’s answer a basic question: what is home insurance? Home insurance (or homeowners insurance) is a policy that covers your home and protects not only the property but the belongings inside of it as well. Generally, you will find three different types of home insurance – contents insurance, buildings insurance and a combined policy of the two. That way, if your home is burgled or damaged due to flooding, fire, electrical failure or any other instance where your personal property may be damaged, insurance can help and protect you. So how do you cut the cost of a home insurance policy?
1. Know what you need
Every home and homeowner is different – so everyone is going to want something a little bit different. There’s no use buying a flashy policy that looks like it might suit you if it’s going to offer things you either don’t need or don’t want. If you own your home outright, then you’ll want to invest in buildings insurance or a combined buildings and contents insurance, as you are liable for any damage done to the property. Note that mortgaged homes are required by the lender to have buildings insurance in place.
If you’re leasing or renting your home, then buildings insurance should already be covered by the owner of the property. Contents insurance should be an automatic purchase, particularly if you own any high-value items like technology or valuable clothes, jewellery or artwork.
2. Don’t pick the first policy you find
These days, it pays to shop around. Thanks to the bounty of price comparison websites, you can find the best deal for you with just a few clicks – and this could help you save money in the long run. Some consumers find it cheaper to purchase a combined policiy to ensure full coverage, but these are not necessarily good value for money and may not be relevant for your current living situation.
You should examine every policy you look at carefully as not every insurance provider covers the same things. Some may even ask you to pay extra to cover you against specific issues, such as legal expenses cover or accidental damage. Making a list of what each provider offers and comparing it against your specific needs will help you select the insurance policy that best fits your property right now.
3. Annual payment over monthly payment
When you sign up for your home insurance policy, you’ll be given two options for payment: a monthly payment or an annual yearly payment. If you can afford to pay the premium upfront, it’s highly suggested that you do so. Not only does it ensure you’re covered for at least twelve months, but some providers may also offer discounts on longer insurance policies if you pay in full when you sign-up.
It can also save you money in the long term: some insurance providers increase the APR (annual percentage rate) when you pay in monthly installments, rather than if you pay yearly. Though this may not be available for some people who take out insurance policies, it can be a nifty way to avoid unexpected extra costs on your insurance payments.
4. No-claims bonus
A no-claims bonus can be earned for every year that you don’t make a claim on your home insurance policy. The more time you go without claiming on your policy, the bigger discount you can receive on the overall cost of your insurance, as – from the perspective of the insurance company – you won’t cost as much to insure over time. Read more about home insurance no claims bonuses here.
A few tricks to do this include thinking twice about making a claim, installing security measures outside your home and investing in things to reduce the potential for weather damage, including flood barriers, fitting smoke alarms and insulating your pipes during the winter to ensure they don’t freeze.
5. Take other precautionary measures
Protecting your home to reduce the chance of theft or damage is an easy way to ensure you’re not overspending on home insurance or at risk of losing your no claims benefits. Installing a security system, including a working burglar alarm, may decrease the chance of a break-in but will also ensure that you and the local police know if someone is attempting to enter the house.
Another tip is to make sure to change the locks of your home when you move in, particularly if you’ve just bought a property. Make sure not to leave valuables on display and consider investing in a safe or other protective measures to keep the most valuable items you own safe and away from prying hands.