Reducing The Cost Of Short Term Insurance

It can be done. With little or no effort you can trim back on how much you pay for short term insurance. Considering that money is becoming increasingly tighter, there is no time like the present to get this done and no better place to start with than your homeowners- and household insurance.

Homeowners insurance

Collectively, it is estimated that home owners are already saving millions upon millions in homeowners insurance premiums by virtue of the fact that banks are no longer allowed to force mortgage applicants into purchasing the banks’ own, in-house homeowners insurance products. If you are still being insured through your bank, a good first step towards savings would be shopping around at the other insurers to check their prices. The rates of these insurers are usually quite a bit lower than those of the banks.

When you valuate your home for the purposes of taking out homeowners insurance, don’t add the value of the land on which is was built to the sum insured because land is not subject to the same risks as the structures. It cannot burn away, break, or disappear as the result of a storm. If it is already included, ask your insurer to remove that value. The only exception to this scenario is if your property is located in an area that has land subsidence threats. In this case, make a point of confirming that you have the necessary cover because some policies explicitly exclude this risk.

Check the excesses that you will have to pay when claiming against your homeowners insurance policy. If you are in a position to pay higher excesses, your premium will be lowered.

Also ask your insurer whether there are safety measures (fire prevention etc.) you could install that would make a meaningful difference to the premium you pay. Compare the installation costs against the potential savings and, if it is worthwhile, do it.

Household Insurance

Many people try to save on their household insurance policies by under insuring the contents of their homes. Although you could probably skim off a few meagre cents in this way, it simply is not worth the risk. Instead, focus on addressing the risk factors that currently drive your household insurance premiums. By mitigating some of these risks, you will lower your risk profile and subsequently the premiums you pay. There are two of the areas within your sphere of influence that, if addressed, could enable to achieve very good returns. The one is security and the other is honesty.

Given the prevalence of crime, security is a very important risk factor – irrespective of where it is that you live. Consider installing meaningful security measures. Here are some of the measures that generally earn policy holders a healthy discount: Difficult-to-scale gates at the entrance to your driveway; high quality slam lock gates at your outer doors; strong burglar bars; panic buttons; movement detection beams that are connected to an alarm system – both in and around the house; security cameras; and electric fencing. Just word of caution…if your insurer grants you a lower premium based on the improved security system at your house, you will have to ensure that this system remains in the same condition that it was in when the insurer visited your premises to assess the changes in risk.

Dishonest claims are a further major risk that insurers factor into their premiums regardless of whether you consider yourself to be Honest Joe / Honest Joan, or not. If you happen to be one of the Honest many, there is absolutely no reason for you to carry the financial burden of the DisHonest few. It may seem a little unorthodox, but if you are prepared to give your insurer upfront permission to put you through a polygraph test each and every time you file a claim, they will be more than prepared to reward you by offering substantial discounts on your household insurance premiums. Strange, but effective!

To conclude

Different insurers make use of different rates, and the impact could be as much as 20%. Just bear in mind when you are shopping around that the policy terms and conditions could vary drastically from one insurer to the next. Be sure to go through these with a fine tooth comb to avoid making a decision that you could later regret.