Have you recently had the “pleasure” of shopping for home insurance? As an insurance broker and the founder of Assurances Multi-Risques, I recently engaged in this exercise so that I could better understand our customers’ reality. After many phone calls and quote requests, I saw how difficult it was to make the right decision to insure your most valuable possession—your home. It may be tempting to simply choose the policy with the lowest premiums, but is this really the insurance product that suits you best? Not necessarily. Because we know that you enjoy saving money, we’ve written this article to share a tip with you for lowering your insurance premiums and to explain the resulting effects.
However, before revealing our little tip of the week, we want to point out that it is completely normal for an insurance agent or broker to ask you several questions before telling you what coverage is right for you and how much your premiums will be. In fact, the more questions the insurer asks, the more reassured you should feel, because this means that they are making sure that everything is clear, thus saving you a lot of problems in the event of a future claim. However, these many questions certainly make insurance shopping arduous, and even painful at times. To save you from having to make multiple phone calls and repeatedly answer the same questions, we recommend that you contact an independent insurance broker who does business with several insurance companies. You’ll save lots of time this way!
Reduce your home insurance premiums by increasing your deductible
A deductible is the amount that you have to absorb for losses or damages for which you have filed a claim. So, for example, if you make a claim for damages amounting to $4,000 and you have a $500 deductible, you’ll receive a $3,500 cheque from your insurer. And if you increase your deductible to $1,000 or even $2,500, your insurance premiums should be lower.
Why? Because your insurer will then consider that you will be making a larger financial contribution in the event of a future claim! This practice may be all the more tempting in home insurance than in car insurance, because in the event of a claim, you don’t have to pay the deductible like you would for car insurance: the deductible is subtracted from the total amount paid to you by your insurer.
Is increasing your deductible always worth it?
Increasing your deductible to lower your premiums isn’t always the right solution; it all depends on your financial capacity and the amount you’re prepared to pay in the event of a claim. To make the right decision, we invite you to first discuss the matter with your agent or broker. Then calculate how much you would save per year by increasing your deductible and how long it would take for the increase in your deductible to become cost-effective if you have no claims.
In addition, remember that a home insurance claim results in you losing a sizeable discount (for a clean record) and follows you for many years. Therefore, if you know that you won’t make a claim for losses below a certain dollar amount and therefore will not lose your discount, increasing your deductible can be an attractive option.
Other tips to reduce your premiums
This is not the first time that our articles have mentioned that increasing your deductible can result in lower premiums. In fact, in one of our previous articles explaining how insurers set their home insurance rates, we gave you several other money-saving tips. Please have a look at it here.
In conclusion, now that we have shared our tip about increasing your deductible to lower your home insurance premiums, we would like to share another money-saving tip: do business with an insurance broker! Not only will they take care of your insurance shopping for you, but they will also find the best price for you based on your insurance needs. Moreover, they will be able to provide advice on the deductible that’s right for you and will be your ally in the event of a claim.