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If you own a home, it’s likely your greatest asset 𑁋 it functions as a living space, an investment, and a place to store all your belongings. Given how valuable your personal residence is, it’s wise to have a plan in place to protect it, should it become damaged or destroyed.
The best way to protect your home is through a home insurance policy. Though you’re not legally required to have home insurance, abstaining from it could prove to be personally and financially catastrophic should disaster strike and ruin your home. Also, your lender may require that you obtain home insurance before issuing you a mortgage. For these reasons, acquiring home insurance is a wise choice – but the downside is that it can be expensive.
Planning on renting out your home? Then you may need landlord insurance.
Home insurance policies vary in their coverage, but the following are some of the most common items you can expect compensation for:
The following are some areas not covered by home insurance:
Many factors affect your home insurance premium, so it’s worthwhile to get acquainted with them.
In general, the higher the value of your home, the higher the insurance premium you’ll have to pay. High-priced homes are expensive to rebuild and repair; the cost depends heavily on local construction costs, the home style, the level of customization, and the prevalence of unique features such as a fireplace, granite countertops, and central air conditioning.
You can reduce your premiums by opting for a low-priced home over a high-priced home.
If your home is old, expect to pay more to insure it. Older homes have unique construction materials and features that are difficult to build and costly to replace. Electrical systems may be outdated and critical elements like the roof may be tattered, resulting in leaks that can cause significant damage. Older homes are also more vulnerable to structural damage, especially in harsh weather.
Consider investing in some upgrades and fixing worn-out structures to save on home insurance on your existing home. If you’re shopping for a new home, ensure you thoroughly scrutinize any ageing homes you come across – avoid ones that may not be worth the trouble, as you could end up paying high insurance premiums.
Check out how gender affects the cost of car insurance.
The location of your home has a bearing on your home insurance policy. Some of the location-dependent factors that affect your home insurance premiums include:
Consider the risks your home is exposed to in your area – if there are too many to contend with, your home insurance premiums could end up costing you a lot. Avoid high-risk areas altogether when scouting a location for a new home.
Installing security features in your home may lead to lower insurance premiums. Security systems, such as cameras, smart locks, motion sensors, and video doorbells, discourage criminals from breaking into your home and stealing valuable items. For this reason, insurers view home security systems favourably and may reward you with a reduction in your monthly premium.
Installing a hot tub or swimming pool on your property can increase the cost of your insurance policy. Should someone drown or be seriously injured, you could be personally liable. Insurers compensate for this risk by raising your premium.
If you’re inclined to add a pool, you may be able to get away with a modest insurance hike, provided you take necessary safety precautions, such as installing a locked fence around the pool and keeping it locked down when not in use.
Here are seven ways you can lower your home insurance cost:
Insurance companies have long argued that an individual’s credit score is positively correlated with increased insurance risk. As a result, they use a credit-based insurance rating system when setting home insurance premiums.
Ensure you maintain a solid credit score. You may get a discount on your home insurance policy if you allow your insurer to inspect your credit report. You can improve your credit score by making bill payments on time, keeping your credit utilization ratio low, and applying for new credit accounts only when needed.
A deductible is an amount you’re obligated to pay in the event of an insurance claim. By increasing your deductible, you’re transferring more risk from the insurer to yourself. As a result, your monthly premium will decrease.
Shopping around is crucial for securing a home insurance policy at a reasonable rate, but the process can be taxing and time-consuming. Luckily, you can utilize an insurance comparison site to quickly compare rates and receive multiple quotes with a single application.
If you bundle your home insurance with the same company you use for your car or life insurance, you may be eligible for a discount.
Consider the level of protection you require from your home insurance policy. Compile a list and assess the costs and benefits of each type of coverage. The more coverage you desire, the higher your monthly premium will be. The type of insurance policy you choose should provide adequate protection based on your circumstances – it’s important not to add redundant coverage that can leave you committed to hefty premiums.
Thinking of switching providers? Learn how to cancel your home insurance policy.
The following types of coverage characterize home insurance policies:
Familiarize yourself with the factors that affect home insurance premiums – if you know what to look for, you can focus your search on homes that cost less to insure. A high-priced home in a crime-ridden neighbourhood that’s prone to flooding is probably not the best way to keep your insurance premiums in check.
Be sure to buy a house you can afford, or else you might find yourself house poor.
If you have zero claims in your home insurance file, you’re more likely to qualify for a lower premium. While claims on their own don’t increase your premium, the frequency of claims made (including premium made on your previous residence) does. You may wish to pay for trivial incidents out of your pocket rather than filing a claim, thereby avoiding a possible premium hike. One or two claims made per decade is acceptable.
While most people agree that home insurance is necessary, there is a wide range of factors that affect the cost you’ll end up paying. As with other forms of insurance, expect a trade-off between your coverage and premium. Ensure you carefully examine the types of policies available and choose the one that offers you the best coverage at the lowest price.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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