Our home policy came up for renewal a few months ago. With the invoice came a premium increase of 30%. Did you catch that? 30% over last year! I know the cost of insurance is going up, but come on – that’s ridiculous. I decided to invest some time to get that number reduced.
Step #1 – Shop around
The line item on our invoice that was labelled “loyalty discount” should really have said “laziness premium.” It’s amazing how much you can save by getting over the dread of research, sucking it up, and phoning around. When we first moved into our house 7 years ago, we saved 60% by switching insurance companies. We’ve stayed with the same company since then and our premium just kept inching up each year. Apparently it was time to switch again.
Step #2 – Check for group discounts
With my membership in the Institute of Chartered Accountants of Ontario (a name my husband always snickers at because he thinks it sounds like a mental institution), I get a discount with a particular insurance company, so I gave them a call. Seven years ago their rates were a lot higher than what we ended up paying. Not so this time. When I told the agent that my husband was a member of Professional Engineers Ontario, our rate ended up being even lower. We cut our rates by about 25% for basically the same coverage.
Step #3 – Is your deductible too low?
While enduring the pain of reading the fine print of possible policies, we took the opportunity to cut back on a few things. We raised our deductible to the maximum they would allow because we would never make a claim for under that amount anyway. We had a tree fall on the hydro line on the driveway during a windstorm in November, and it never occurred to us to call the insurance to see if it was covered. If it had happened a few metres to the North, it would have been on the road and not our problem, but because it happened on our property and this part of the line services only our house, we had to pay to fix it. Our power was out for 92 hours. Turns out I sleep great in about 10 degrees Celsius with about 10 blankets on top of me, but I digress. Two lessons here: First, make sure no trees are looking weak next to the hydro line, especially after the drought last summer. Second, talk to your broker about the benefits (and drawbacks) of a higher deductible.
Step #4 – Read your policy for items you don’t have
Most companies put limits on how much they will insure in certain categories of belongings – like jewellery, for example. Being the practical gal that I am, I don’t own nearly the amount of jewellery that we had coverage for. We would never be able to collect on it because we don’t own that stuff, so why were we paying extra? We saved some more money by getting rid of this policy add-on.
Step #5 – Read your policy for coverage you don’t really need
There were also a bunch of optional coverage areas that we declined. We accepted some because they made sense for our needs, but we also were not afraid to say no “even though it’s only $8.18 per month for that coverage.” To me, that’s like buying 2 premium coffees. Why would I do it when I can’t stand coffee and therefore don’t want to?
You will want to talk to your broker about what coverage you need and don’t need. The terms on our policy were very confusing, and I’m not saying what coverage we cut because what made sense for us may not make sense for you. Being a CA gives me no more credibility in analyzing the ins and outs of insurance policies than any other reasonably intelligent person.
Step #6 – Research the company you’re thinking of switching to
This doesn’t have to take a long time. Even just Googling them will let you know if people have had problems making claims. The buzz online about the company that we switched to is good.
Step # 7 – Celebrate your savings
Overall, with all the changes we made, we cut our home insurance cost by 52%. It was worth the few hours of investment! I’m happy to put that money towards something else. Best of all, I’m glad to not have to think about this again for another year. Oh, except that in my reading I discovered that I should be taking pictures of all our stuff and saving the photos online. Apparently I’m supposed to include the make, model, and serial number of all our items with the photos. Good grief that sounds like a huge project even for an organizational junkie like me. Does anybody actually do that? I found an app that’s supposed to make it easier. I’ll let you know how it goes when I finally get around to it.
On a final note, this advice works for auto insurance as well. I followed the steps in this post a few weeks ago and cut our auto insurance premium by 23%.
Has your insurance premium increased this year? What are you going to do about it?