Six ways to save on your home insurance premiums

Your home is one of the biggest purchases you may ever make. You worked hard and saved for the deposit, and now the mortgage payments eat up a large portion of your take home pay.

Building and contents insurance is an important part of covering your asset, and your premium is the amount of money you pay to cover your home. Here are six ways that may help reduce your home insurance premium so that you might have extra cash to enjoy other areas of your life.

1. Increase your excess

Your excess is the amount you contribute when you want to make a claim. Once your claim is accepted, your insurer covers the rest up to the policy limits. For example, you’re paying $100 a month for home insurance when there’s an insured event, such as a fire. Your home is damaged in the fire, and it’s estimated to cost $100,000 to make the necessary repairs. According to your policy, you might need to pay $800 towards this claim – that’s an excess.

If you want to reduce your monthly $100 premium, you might be able to increase your basic excess within a given range, which could reduce your premium.⁵ However, increasing your excess could also mean that you’re less likely to make claims for small amounts. There’s little point making a claim to replace a $500 window if the excess is $1,500 – you’ll need to pay $1,500 to get $500 back. Before making a decision, consider the benefits and costs of increasing your excess to reduce your premium.

2. Estimate the replacement value of your building and contents accurately

Try to make an accurate estimate of the replacement cost of your home building and your household contents. You may want to use building and contents insurance calculators as a guide to help you decide your sum insured.

If you overestimate the replacement costs, you’ll pay a higher premium, but you’ll only receive the costs for repairs or replacements. If you underestimate your replacement costs you may not be able to replace the item for the amount it was insured under.

3. Install alarms

Home security is essential for many reasons, such as preventing an unwanted visitor from making off with your belongings. It can also mean reduced insurance premiums. That’s because your insurer may consider your home as being less at risk of a break in, so you’re less likely to make a claim. Installing security measures such as back to base alarms, may help to reduce your insurance premium as well as keep your home secure and your family safe.

4. Consider the area you’re buying into

When you’re researching where to buy a home, some of the considerations you need to think about are:

• Is there a risk of flood or bushfires?
• What are the crime rates in the area?
• Is there a risk of earthquakes (however remote)?

These are some of the factors that insurers use to calculate your insurance premium. So, investigating what risks your potential new home or neighbourhood might be subject to can be helpful.

5. Choose your cover wisely

Weigh up whether certain covers are essential for your circumstances. Review any optional covers on your Policy Schedule and decide whether they suit your current needs.

6. Combine your Building and Contents cover

If you have separate building and contents covers, consider combining them. Did you know that you can save up to 10% when you buy both building and contents cover and combine them on the one COTA Insurance policy?^2,4

There are many ways to reduce your insurance premiums. It pays to delve into the options available, and to find out how your insurer can help you.

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Insurance and Membership Services Limited, ABN 59 057 159 743 AR Number 246235 trading as COTA Insurance arranges this insurance as agent for the insurer Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL No 234708. We do not provide any advice based on any consideration of your objectives, financial situation or needs. Policy terms, conditions, limits and exclusions apply. Before making a decision, please consider the relevant  Product Disclosure Statement  available from cota.com.au.  The relevant Target Market Determination is available by calling 1300 1300 50. If you purchase this insurance, we will receive a commission that is a percentage of the premium.  Ask us for more details before we provide you with services.

2. [Applies to Home & Contents only] A discount of up to 10% is applied to your premium when you combine Buildings and Contents on one Home and Contents Insurance policy, including the optional covers (if selected): Motor Burnout and Accidental Damage cover. The combined discount doesn’t apply to any flood component of the premium (where covered) or to the optional Portable contents (if selected) and Domestic workers’ compensation (if available and selected). Minimum premiums may apply.

4. Where discounts are applied, your premium is subject to rounding. If more than one discount applies, they’re applied in a predetermined order, so the later discounts apply to the amount already reduced by the earlier discounts instead of the total amount. Discounts do not apply to government taxes and charges. Most discounts won’t apply below the minimum amount payable for the policy.

5. [Home] Not available with respect to any additional compulsory excess, any imposed excess applied to the policy, or to the Portable contents excess (if Portable Contents is selected). Any reduction in premium won’t be applied to government taxes and charges, any flood component of the premium (where covered), or to the optional covers Portable contents (if selected) and Domestic Workers’ compensation (if available and selected). Minimum premiums may apply.