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HomeFINANCEHow to save on home insurance

How to save on home insurance

When we talk about insurance, we talk a lot about the “small print”, that is, conditions that are not paid much attention to when signing the contract. However, the secret to save on home insuranceor in others, may be right there.

When thinking about buying a house using a bank loan, you have to leave room in the budget for this expense that is not included in the value of the installment you will pay. Generally, and even because the bank says it offers better conditions if you buy these products from associated insurance companies, many people don’t even think twice and choose this option right away.

And here may be an error. On the one hand, it is not always true that the option offered by the bank is the best. On the other hand, you are under no obligation to take out home insurance at the same institution where you have or are going to make the home loan.

So the first advice is not decide anything without informing and comparing. And if you realize that there are better options on the market, you can try negotiating with your bank.

What is home insurance?

Another important point to save on home insurance is knowing which insurance you really need to take out. That is, there are mandatory insurances by law and others that you will only take if you want to.

sign insurance contract

Life insurance

Contrary to what is thought, the obligation to take out life insurance is not in the law. What happens is that banks generally do not grant credit without this insurance.

On the one hand, it turns out to be a way of ensuring that, in the event of death or disability, the family is not left unprotected. On the other hand, banks ensure that the credit is paid.

how to save

In life insurance associated with housing credit, there are two types of coverage. And although one is more expensive than the other, this is one of those cases where cheap can be very expensive.

The coverage by Absolute and Definitive Disability (IAD) may be cheaper, but in order to claim the insurance you will need to have a disability greater than 80%. That is, if you have an accident or a serious illness, but you are not completely disabled, the insurance will be of little or no value.

already with the coverage for Total and Permanent Disability (ITP)the insurance can be activated if an illness or accident results in a disability of 66.6%. And, in this situation, the house is paid for, which makes all the difference.

In addition to this aspect, and especially if you have taken or are going to take out life insurance with your bank, it is important to check whether or not a possible change of insurer will worsen your credit provision.

That is, to offer a spread lower, banks usually offer the customer to purchase other products. And by giving up one of them, you can lose that bonus.

Still, the penalty can compensate for the change. Although the insured capital is adjusted every year to the capital owed and therefore the premium payable should be lower, the fact is that this is not the case. The premium increases with age, as the risk of a fatality increases for the insurer. Therefore, analyze the annex that appears in your insurance and where the annual value of the premium is located. When the increase is large, consider changing your life insurance.

It’s all a matter of doing the math.

Saving on home loan life insurance

See too
Do you have a home loan? Find out how to save on life insurance

fire insurance

Of home insurance, the only really mandatory is fire insurance and only for buildings under horizontal ownership, that is, the so-called condominiums. This insurance should cover not only your home, but also common parts of the building, such as stairs, roof, elevators or garage, for example.

Fire insurance covers damage directly caused to the insured property as a result of the fire. If the policy does not say otherwise, damage caused by lightning, explosion or other similar accident, even if not accompanied by fire, may also be included.

how to save

This insurance is so important that if you don’t do it within the stipulated period or at the amount determined at the joint owners’ meeting, the condominium administrator must do it, charging you later that amount.

So, and to ensure that you won’t pay more for insurance that you didn’t choose, make sure you have this policy up to date.

You can choose two modalities: Fire and Elements of Nature or have this option included in a multi-risk insurance. If you are considering coverage other than fire risk, this last option may pay off.

Multi-risk housing insurance

Although not mandatory, banks usually offer to take out multi-risk insurance which, as a rule, includes fire coverage.

However, multi-risk insurance is more comprehensive, as it offers a set of optional coverage for damage to the property or its contents. In addition to the risk of fire, it can cover, for example, floods, storms, theft or theft.

how to save

When taking out a home loan, carefully consider what coverage you need. Are you going to protect just the walls of the house or all the investment you make in it?

Multi-risk insurance normally has a set of pre-determined coverages, but it is possible to add other complementary coverages. The premium is therefore calculated on the basis of the coverage contracted.

Depending on what you want to insure, this option can be more advantageous than adding several insurances, often with duplicate coverage. Again, it pays to do the math well beforehand.

home stuffing insurance

This coverage is not mandatory. and can either be included in a multi-risk insurance, or purchased separately.

Do not forget that the so-called “wall insurance” does not include the contents of the house, that is, furniture, appliances and valuables are left out. So, if you want to be sure that the protection is more comprehensive, you can insure the stuffing.

But first check the coverage you may already have in other insurance contracts, namely if you already have or are going to take out a multi-risk. It’s not worth paying twice for the same thing.

how to save

Calculate how much you would have to spend to replace everything you have at home. Not only furniture and appliances, but also clothes, shoes, books, records, etc.

Photograph the rarest and most valuable items, such as works of art, jewelry or old coins, for example. These must be broken down and valued individually in the policy, otherwise the insurer only pays a certain amount in the event of a claim, normally 1,500 euros. In addition, she must always keep the receipts that prove the acquisition of the goods.

To minimize damage in the event of a claim, it is important that the premium value reflects the value of the items that make up the contents.

More tips for saving on home insurance

Couple putting money in a piggy bank

To save on home insurance, the key is find out what coverages you already have or what do you want to have. Even because you can only compare values ​​after knowing what each one of them includes.

Cheaper insurance can cover less risk, and if something happens, you may find that cheap is expensive.

Carefully read the insurance conditions and only hire the essentials

Carefully read the conditions of the insurance you are going to hire and see if the coverage actually meets your real needs. Only hire what you consider essential, avoiding paying for what you don’t need. But be careful, hire the one that gives you greater protection, such as Total and Permanent Disability in life insurance, even if it is more expensive.

Do not duplicate coverage

See if you have insurance that covers the same risk. You will be paying twice for the same coverage and you will not be able to apply both for the same claim, as the claims are not cumulative. So avoid duplication of insurance.

gather insurance

It might make sense take out multi-risk insurance that includes fire and contents insurance instead of doing them separately.

To have all insurance in the same company may or may not compensate. That’s why there’s nothing like comparing prices, always taking into account coverage and exclusions.

Insurance at the bank or the competition?

It is also important to understand whether it pays to insure the house with the insurance company indicated by the bank or to look for another option.

Oftentimes, the bank offers a spread lower if you take the insurance that he suggests, such as life insurance or multi-risk insurance, but it is necessary to see if this savings is effective. And if you change insurers, you do not lose this bonus.

Ask other insurers for simulations and do the math. Even if you end up paying more for the credit provision, it can still pay off to make (or transfer) the insurance contract to a different insurer.

If that’s the case, talk to your bank and try to negotiate. Not infrequently, the bank’s own insurance company ends up following the competition’s prices so as not to lose the customer.

Use an intermediary when contracting your home insurance

If you don’t have time to look for the company that offers you the best conditions for your insurance, choose an insurance intermediary or agent.

This one will do this work for you, helping you to save money on insurance associated with home loans, in addition to having a personalized service and being able to get insurance more targeted to your needs.

Take advantage of insurance promotions

Insurers sometimes have discount campaigns on some insurances. Be careful and enjoy if you can. In addition, see if you are a member of any entity or club that has partnerships with insurance companies, which can allow you to reduce the cost of your insurance.

Attention to deductibles

Also pay attention to deductibles, that is, the amount up to which the insurer is not responsible for the loss.

In order to get home insurance with a lower annual premium, there may be a temptation to accept higher deductibles on some coverages. But this means that in the event of an accident, you will have to pay a greater part of the damages.

Imagine, for example, that the deductible is 200 euros and the damage suffered is valued at 150 euros. In that case, you will not even be entitled to receive any compensation.

Update the insured capital

Finally it is important to go updating the insured capital, even to know what you can count on if something goes wrong. The insured capital is the maximum amount that the insurer will pay in the event of a claim, even if the loss is greater.

The insured capital update must be done by the insured, who has two options:

  • The conventional update, made annually based on a percentage indicated by the policyholder, who can decide on a fixed update; or
  • The indexed update, made annually according to the variations of the IE (buildings), IRH (filling) or IRHE (filling and building) indices. These indices are determined quarterly by the Insurance and Pension Funds Supervisory Authority and published in the Diário da República.

Information, comparison and negotiation are thus the three keywords when it comes to saving on home insurance. The process may take you some time, but the truth is that it will end up saving you money.

Pay the premium annually

Paying the annual premium amount can be cheaper. Many companies offer discounts if you opt for a one-time payment instead of paying monthly, quarterly or semi-annually. If your budget allows it, opt for this solution.

Pay by direct debit

It’s another way you can save on your insurance. If you choose this means of payment, many insurers offer a discount on the premium, as they guarantee greater speed in receiving the funds, also saving on sending the invoice for payment.

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