If you want to reduce your home and contents insurance premiums, you need to know exactly what you’re insuring.
First up, when’s the last time you had a wander around your house and assessed the value of what’s inside? The carpets, curtains, electronics (TVs, computers, home entertainment etc), furniture, clothes… fill in the blanks. Now go and check your current contents coverage. I bet you’re under-insured.
Your home and its contents represent a serious portion of your wealth. Which is why it’s so important to take out the right level of home and contents insurance to cover you in case the unexpected happens. It makes no sense whatsoever to reduce your premiums if it means you’re not covered for everything.
Remember, it’s yours to lose. There’s an old saying that insurance premiums are expensive… except when you need to make a claim.
Unfortunately, a horror run of natural disasters over the last few years has substantially increased the price of home and contents insurance.
To help tip the scale back in your favour, here are my top five tips to reduce your home and contents insurance premiums this year.
How to reduce your home and contents insurance premiums
1. Know exactly what you need
Hopefully you’ll never need to use your home and contents insurance, but if the worst does happen it pays to be smart now about the level of cover you choose.
Try and find the right balance between fully protecting assets and cutting unnecessary features to reduce premiums.
To start with, make sure possessions are listed accurately and honestly with your insurer.
Underestimating the value of contents means you’ll have to pay the difference at claim time. Overestimating will not only increase premiums, it could be considered fraud and the insurance company may refuse to pay.
Also think about your living situation and how it impacts the features you need.
For instance, if you live on top of a hill miles away from the nearest river, flood cover is probably not important. If you live in Sydney, earthquake cover might not top your list.
2. Understand your options
If you’re still scratching around to pay premiums, take a look at your excess.
The excess is the amount you have to pay towards any claim. For example, if your excess is $500 and you’re making a $5000 claim, you’ll have to pay the first $500 of the claim.
Increasing the excess to, say, $1000 will typically lower premiums. Just remember it will also reduce your ability to claim because of the upfront cost attached.
Also, check if your insurance company allows premiums to be paid annually at a reduced rate, compared to monthly payments on the same policy. The only problem is stumping up the cash, but there might be significant savings.
3. Secure your property
Insurance companies calculate premiums based on the risk you will make a claim.
So if you’re insuring contents in an inner city area with high crime rates, your premiums will be higher than contents in a quiet suburb with low crime rates.
Similarly, if you’re insuring a home on a recognised flood plain, the premium will reflect that additional risk.
And while you may not be able to change where your house is located, you can make sure it’s as secure as possible.
Installing security features like alarms, security screens, lockable window bolts, and smoke alarms will not only increase personal safety, but will also reduce the risk you’ll have to make a claim.
4. Show your loyalty
Look into bundling home and contents insurance with other cover like car or life policies.
Many companies will offer a loyalty discount for bringing all your policies together, so it’s definitely worth considering if you can match or improve a current policy when you consolidate.
5. Shop around
Do not automatically renew premiums. There are a number of websites that compare offers from different providers and give quotes on what they’ll cost, so it’s easy to look around. Try checking one of these:
But once you’ve made a choice, don’t get complacent.
Instead of just renewing the contract every 12 months, make the effort to look at what’s out there. And if you are serious about moving, let your current provider know because they’ll often go the extra mile to keep your business.