Insurance is a major expense for every homeowner. When you take out a policy though, it's usually at a time when you are in a hurry. You might be in the middle of trying to secure finance to make an offer, or in a rush to arrange your settlement day. You probably don't have a lot of time on your hands to analyse what's on offer and ensure it is the best setup for your needs.
To make up for this, set a date (maybe on the anniversary of your home purchase) to review your position and make sure you are getting the best possible deal. It could save you a lot of money in the long run.
Here are a few aspects to consider:
Review your excess
Most insurance policies start off with a standard low excess. Perhaps $250 or $500. Meaning, anything below that price you will pay for yourself. Or, if you make a claim, you will pay that much towards the repair cost.
It's worth investigating how much you could save on your insurance premium by increasing your excess. Upping it could take a significant chunk off your premium.
You can then consider whether you want all expenses covered by your insurance, or whether you want to have an insurance policy for the major events only and essentially 'self-insure' for anything that costs less than say, $3-5k to fix.
If you have a sound home that you maintain to a high standard and are able to keep some money set aside for emergencies, then a higher excess can be a relatively low-risk way to save hundreds of dollars every year on your premium.
Review your current policy (especially the sum-insured value)
This tip might actually increase your premium in the short term but could save you a lot of money in the long run. More and more insurance companies are using 'sum-insured' policies for residential properties. Meaning, if your home is destroyed in an event covered by your policy, your insurance company will pay out the pre-agreed sum-insured amount, regardless of the market value of your home.
If you haven't reviewed your sum-insured amount in years, then you could find it's now far too low and a pay-out at that level wouldn't allow you to rebuild a similar home at today's building rates.
Search for a sum-insured calculator online to get a rough estimate of what your amount should be, or contact a local valuer for advice.
Shop around
Searching for a better deal on your insurance is one of those 'important but not urgent' jobs that often gets pushed to the bottom of the to-do list. Extra costs mount up over time though and optimising your insurance could leave you with more money in your pocket to save, invest or put towards the mortgage.
As with any industry, cheapest isn't always best. So ask around for advice and look for reviews online so you can make a balanced choice between service and cost.
Switching insurance companies is becoming easier and easier all the time. So jump online and take a look!
More quick ideas:
You can often make extra savings by bundling your car / house / contents insurance together.
Check out how much you could save on your premium by installing a home alarm.
Get on the phone and tell your insurance company you are thinking of moving! Just the suggestion alone can often get you a better deal.
Ask about optional add-ons. Often, your company will charge extra for potentially unnecessary add-ons like 'broken window cover'. These extras mount up over time.
Thanks for reading!
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