How much home insurance do you need? To answer that question, you have to decide what you want to insure, and then find out the costs. Getting good service is also important. Before you buy, ask yourself:
- Do I need peace of mind from knowing I have full and complete insurance coverage for my home?
- Am I comfortable insuring myself only for the most likely losses?
- How much of any damage or loss am I willing to pay (the deductible)?
- How much coverage can I afford?
- Who do I want to be dealing with at a time of loss?
Five tips to keep your home insurance costs down
- Shop around. Get quotes from more than one insurance company. Check the Internet for online quotes. Insurers all calculate things a bit differently. Costs can vary widely, even for the same coverage.
- Take a higher deductible. For example, let’s say you have a $500 deductible. This means you will pay the first $500 it costs to replace your things after a fire or a theft. The higher the deductible, the lower your premium will be. So, if you never have a loss, you’ll come out ahead with a higher deductible. However, if you ever have losses, you may pay more in the end. Only you can decide which risk you prefer to take.
- Take advantage of group plans. Check if you can get some of the same coverage more cheaply through a workplace plan. Or, if you belong to a group like a union, a professional association, or even the Canadian Automobile Association (CAA), you may also get a lower group rate.
- Don’t pay for coverage you don’t need. Most property policies cover losses from fire, lightning, windstorm, hail, and certain types of water damage. If there is a chance that you could have damage from things like sewer backup, or earthquake, you will likely need to add to the coverage on your policy. It’s up to you to decide what coverage you need and can afford.
- Take any discounts you can get: Insurance companies often offer discounts. For example, you may pay a lower premium if you have a home alarm that a security service monitors. Some insurers will also offer lower rates to loyal, long-term customers, especially if you have other insurance with them, such as your car insurance.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.