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8 ways to save on home insurance

Many people don't even think of trying to reduce their home insurance, according to one insurance agent.

"Most homebuyers don't even question it. They simply sign the cheque once a year and that's it," says John Gelston, chief broking officer for Hunter Keilty Muntz and Beatty in Toronto.

That's a shame because there are many ways you can save on your home insurance. While many agents review most of these options with you before you buy, some discounts kick in after a few years, unbeknownst to you.

But according to our experts, all you have to do is ask, and you may be eligible for a better rate than you expected.

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Opt for a higher deductible
If you increase your deductible above the $500 norm, you can receive a discount. How much you'll save varies from company to company and province to province. But you should save about 10 percent on your premiums for every $500 increase, says Geraldine Bailey, senior account manager for Canadian Brokerlink in Toronto.

That's because when you pay a higher deductible, you save the insurance company money: "When we assign an adjustor to a $1,000 claim, they spend about the same amount of time on a large claim as they do on small claims," she says.

Increasing your deductible has the most benefit on bigger policies. This option "isn't good for small policies around $300, but when you're looking at insuring a $400,000 to $600,000 home, with a cottage, and pay a premium of $2,700 a year, that's a good savings," says Bailey.

Buy a brand new home
If you buy a new home, you'll get a discount of between 15 and 25 percent off your regular premium. The idea is the chance of making a claim on a new home versus an older home is much lower.

"The discount decreases [once] your house is five years old, but remember, some companies won't offer this," so you have to ask for it, says Bill Blaney of Bill Blaney Insurance in Dorchester, Ont.

Avoid making claims
Most policies come with a claims-free discount of about 10 percent. However, you must go three years without filing a claim in order to receive it. So, ask yourself, is making a claim for a $200 repair today worth losing a $50 or $60 credit for each of the next five years? You may be better off paying for small repairs yourself so you're able to get the discount later.

Ask for the senior's rate
Some insurance companies offer discounts to senior citizens, often as much as five or 10 percent. "Some companies consider you a senior as young as 50, other insurance companies wait till 65 or older," says Gelston.

So, you should always ask if there's a mature rate. "Unlike auto insurance, there is no way on a home insurance application to tell how old you are. There isn't a birthday [line] on your application," he says.

Choose your neighbourhood wisely
Insurance costs are higher if you live outside a fire-hydrant-protected area since it takes longer for fire trucks to reach you, increasing the likelihood of damage to your home and a bigger claim.

You get the best rate for living within 10 minutes of a fire hydrant. If you're within 10 kilometres of one, you get the next-best rate. But if you're outside that 10-kilometre zone, you're considered unprotected. And that's when your premiums get expensive.

Bundle up
Having your auto insurance and your house insurance with the same company can also reduce your home insurance.

"Insurance companies cannot force you to do that, but they do offer a discount for it," says Blaney, often in the neighbourhood of 10 percent. However, if you insure your house and cottage with the same company, there is no discount.

Buy a monitored alarm system
"We encourage our customers to put in larger alarm systems," says Blaney.

A good system with 24-hour monitoring will run you about $25 a month and get you a 10-percent discount on your insurance. The security company will issue you a certificate outlining your coverage, which you then show the insurance company.

If the house is not monitored, but there is a security system, you may be eligible for a discount of up to five percent, says Blaney.

Stay in one place
If you live in the same home for three years or more, you are eligible for a discount of about five percent. But if you've lived in the same home for 20 years and then move, all bets are off. "You only get the stability discount while you're in the same home; it's very confusing that way," says Bailey.

That's why she says the key to savings is a good insurance broker. "Once you're on the books, it really is the responsibility of the broker to make you aware of any discounts or any that they might be able to come up with," she says. So be sure you're working with a good broker. If you need to find one, check with friends, family and co-workers for references.

Melanie Chambers is a writer in London, Ont.

-- Posted: Jan. 12, 2005
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