Homeowners insurance is not mandatory unless you have a mortgage, in which case the mortgage company will require you to pay for coverage.  And though not mandatory it is a real necessity.

Replacing parts or your entire home and your personal property is an expense most of us can not afford.

If offered, you should always opt for ‘replacement cost’ policy rather than ‘actual cash value’.

The ‘replacement cost’ clause insures that regardless of costs your home will be rebuilt to the same state as before the loss, and while the clause may cost a bit extra, it is well worth it.


Insurance rates are based on a many factors including age of your house, type of house (brick or frame), type of heating/cooling, age of electrical wiring, age of plumbing, location of your home, etc.

Understandably, a brick or stone house is less likely to incur as much damage as a frame home in case of a fire.

Similarly, a home that was updated (i.e. new electrical wiring, new plumbing/heating system, etc.) is less likely to sustain electrical fires or water damages due to burst pipes.


Here are some ways to save on premiums:


Deductible – all policies have a deductible. The higher the deductible the lower the premium, so do opt for a higher deductible.


Multiple Policies – most insurance companies offer more than one type of product, so if possible purchase your homeowners policy from the same provider as your auto insurance policy – you’ll get a discount on both policies.


Security System/Smoke Detection System –all insurance companies discount their policies, especially if the security system is connected to a central monitoring station which in turn is connected to the local police department. The discount varies but could be up to 5-7% of the annual premium.


Sprinkler System – while not a plausible option for most of us, if you install a central sprinkler system in your house, the insurance company will drastically discount your policy since the home is protected in case of fire.


Pay of your mortgage – insurance companies will offer lower rates to owners who have no mortgage. The logic being that owners will likely take better care of their home, than those ‘owners’ whose house is really owned by the bank.


Make sure you review and update your homeowner’s coverage each and every year. Do advise your insurance broker of any changes such as improvements and betterments you have made during the year.