Are there ways to reduce my premium if I am deemed a substandard risk?

Q:

My premiums are high because my insurance company has deemed me a substandard risk. Is there anything I can do to lower them?

A:

The easiest ways to reduce your premium despite being deemed a substandard risk is to either increase your deductible or reduce your coverage.

Increasing your deductible helps lower your premiums because, from the insurer's point of view, it reduces the number of instances in which it would make sense for you to submit a claim. For example, it would not make sense to make a $1,000 claim if your deductible is $1,500; you would be losing money making the claim (learn about The Pros and Cons of Increasing Your Auto Deductible).

Reducing your coverage also reduces your premiums, but it does so at the expense of either having fewer things covered by your policy or having them covered for a lower amount. Essentially, reducing your coverage means you take on more of the risks rather than transferring them to your insurer.

The other ways generally involve making yourself a "better" risk in the eyes of the insurer. Although not all of these will apply to your specific case, insurers typically give discounts for measures that reduce risks, such as:

  • New Construction: newer buildings tend to be safer and more up to date with building codes
  • Sprinkler Systems: well-functioning sprinkler systems reduce the odds that a fire will cause enough damage to warrant filing a claim
  • Sole Occupant: being the sole occupant of the building reduces risk
  • Protection Devices: such as burglar alarms and watchmen
  • Detachment: your area and the characteristics of your neighboring risks

While you might not be able to control things like detachment or being a sole occupant, you can easily pick up some discounts by installing an alarm. You can also ask your insurance agent or insurance company about any other measures you can take to quality for similar discounts.

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View all questions from Jacques Wong.

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About the Author: (Director of Education at PNC Learning)

Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.

In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.

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