10 no-nonsense home insurance tips

All Canadians will pay more for their home insurance in the coming year, whether or not they’ve made a claim. Your clients will be wondering why. Here’s how to explain how insurance works, and some proactive ideas you can pass along to keep them happy with their policies.

While there are several reasons policy costs go up, the main one is that your clients’ local home insurance providers are part of the worldwide market, says Square One Insurance. That means disasters (and claims) from across Canada and around the world affect the rates charged for their policies.

To help keep premiums down, tell your clients:

• Only insure belongings you own. Most home insurance policies include $6,000 of coverage for fur coats and $5,000 for gold bullion. If you don’t own either, why pay to insure them? Find a provider that lets you personalize your policy to your needs and pocket the savings.
• Don’t over-insure your house. If you own a house, you should only insure it for the amount it would cost to rebuild, not what you paid for it. When you bought your house, you paid the market price for the house and the land. Home insurance only covers the house.

• Increase your policy deductible. The standard policy deductible on most home insurance policies is $500. This amount made sense 20 years ago, but it is quite low by today’s standards. Increasing your deductible to $1,000 or $2,500 is one of the easiest ways to save money.
• Don’t file claims for small losses. You have the right to file a claim no matter its size, but keep in mind your policy includes a claims free discount that can total 20% or more. So, do the math before submitting your claim. You might be better paying a small loss out of your own pocket.
• Find an interest-free monthly payment plan. Most providers offer monthly payment plans, but beware because not all plans are created equal. Many plans charge interest rates that are higher than what you would pay on your credit card. So, look for plans that are interest-free.
• Shop around for the best coverage and rate. Just because you’ve been with your current provider for many years, or you buy both your home and auto insurance from them, doesn’t mean you’re getting the best deal. Get comparison quotes online and you’ll likely do better.
• Recommend your friends. If you’re happy with your provider, ask if they have a referral program. Some companies offer account credits for each person you refer who buys a policy. Not only will you save money, but you’re helping your friends save money, too.
• Install a backwater valve. These devices prevent water backing up into your home from the city sewer system. The device costs about $100 and installation costs about $1,000. Many cities offer rebates, and some insurance providers offer discounts for installing these devices.
• Replace plastic and rubber plumbing hoses with braided steel ones. Plastic and rubber hoses connected to fridges, dishwashers, washing machines and toilets are prone to cracking and leaking over time. Replacing these hoses with braided steel ones to reduce the chance of a loss, which helps keep your premiums low.
• Install a monitored burglar alarm. All insurance providers offer discounts if you have a burglar alarm installed, activated and monitored. So, consider installing one. Not only will you save money on your home insurance, you’ll also have some extra peace of mind.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.