When I recently received my homeowners insurance renewal documents, included was a letter explaining why the rate was increased.  It stated how “severe catastrophic events worldwide continues to be a leading cause of loss for insurance companies,” blah, blah, blah.

“So what” I thought, “I don’t live in a hurricane/earthquake/tsunami prone area.  What does this have to do with me?”

Related: How Prepared Are You If A Disaster Strikes?

Often with huge increases our first instinct is to start shopping around at other insurance companies.  While it’s not a bad idea to compare rates, you should first review your coverage with your existing company.  Many times they’ll offer discounts for long term loyal customers.

How I Saved On House Insurance

By spending about twenty minutes on hold with my insurance provider (while working on a couple of on-line jigsaw puzzles) and discussing the policy with the helpful agent I saved over $300 on my house insurance – ka-ching! – and, as an added bonus, I saved almost $50 on the car insurance.

Well worth my time and effort.  Here’s how I did it:

Update your information

The first thing I noticed was the replacement value of the house was about $100,000 too high.  The amount should be the cost to rebuild – not the market price.  Don’t include the land value.

Next showed the age of the roof and heating to be 33 years (the age of the house).  The roof, furnace and hot water heater were upgraded within the past five years.  They also gave credit for the carbon monoxide detector.

Related: ecoEnergy Retrofit Program

Other changes that could affect your premiums are:

  • Getting married (except Nova Scotia)
  • Improved credit score
  • If you’ve stopped smoking
  • If you’ve lived at the same residence for a certain number of years
  • Impact and fire resistant roofing
  • Taking in boarders
  • Having a business on the premises

The agent even asked me if I still had three cats.  I don’t know the relevance of this, though – I forgot to ask.

Don’t under-insure

One mistake made to reduce costs is to under-insure.  Make sure you take replacement value for your furniture and belongings.  If you live in an area exposed to certain risks – hail is a big one where I live – make sure you pay the extra premium.

The extra $15 we paid each year for water damage coverage was especially appreciated when our basement flooded a few years ago and everything was rebuilt and/or replaced.

Purchase special endorsements to cover the full value of expensive jewelry, artwork, antiques etc. as these are subject to coverage limits on the standard house insurance policy.

If you have a lot of add-ons that increase your total you can offset part of the cost by raising your deductible to $500 or $1000.

Have sufficient savings in your emergency account to pay it.  Most homeowners have very few claims.  I’ve had only two claims in over 35 years.

Often with a large claim – like my flood – deductible amounts are not even charged.

Final thoughts

Homeowners buy insurance to protect against disaster.  But when disaster strikes your insurer might not live up to your expectations, especially if you have a large claim.

Make sure you read your policy every year to see what is included, and how much is covered.  New discounts could apply to your new life situation if it has changed.  Only pay for what you need, but don’t under-insure.

Related: How Much House Can I Afford?

Switch insurance providers if you can get a better price, but if you choose to stay with the same provider, be willing to negotiate.  Go with the product that’s best suited to your needs at a price you can afford.

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