House insurance is pretty much a mandatory part of home ownership. While it’s not required by law, if you’re buying a home in Canada, your lender is going to require you to have insurance. This makes sense, a lender uses your home as a guarantee that they’ll have their loan repaid. If you don’t have insurance and the house floods or there’s a fire, they’ll lose that guarantee. However, that doesn’t mean you should have to sell a kidney each month just to pay your premium. Here are four ways to save money on your house insurance.
Know the Actual Rebuild Cost of your Home. Many first time homeowners (and many veteran homeowners to boot) insure their home for the same amount as they purchased it for. However, when you buy a house, you’re also buying the property it sits on. Even if your house burns to the ground, the cost to rebuild will never include the value of the land. Instead, you should hire an expert to evaluate the actual rebuild cost of your home. Some of the construction and home building companies around Calgary might even do it for free if you ask them.
Raise your Deductible. Whether it’s health, auto, or home insurance, most plans come with a deductible. The deductible is the amount you’re willing to pay out of pocket when you make a claim. Say you have a deductible of $700 on your home insurance and discover a leak in your washroom that’s caused the floor to mold among other problems. They send someone who estimates the cost of repair to be around $3000. In this case, you’d pay your $700 deductible and they’d pay the other $2300. Since a higher deductible means you’re taking more of the burden onto yourself, it makes sense that raising your deductible will lower your monthly premiums.
Keep in mind that the more often you use your insurance the higher your premiums will be. If a repair is only going to come out to $100 or $200 more than the deductible, you may be better off covering the cost yourself.
Bundle Insurance Plans. Many home insurance providers also offer health, auto, and / or life insurance. By bundling your insurance plans and using the same provider for all of your insurance needs, you’ll likely benefit from discounts.
Quit Smoking. Everyone knows that smoking is bad for their health, but insurance companies know that smoking is also bad for houses. Cigarettes have led to their fair share of house fires, and insurance companies are more than happy to make smokers pay for the extra risk. If you smoke, you may want to quit — it’ll be better for your health and your wallet.
House insurance is an almost inevitable part of homeownership, so it’s important to make sure your insurance is working for you. Many new homeowners may not realize that there’s more to buying a house than just paying the mortgage. School taxes, property taxes, and house insurance premiums are just the beginning. If you have any questions about buying a home in Calgary or the responsibilities that come with being a homeowner, contact me today!