How Will Downsizing Change My Homeowners Insurance?
Each year, more homeowners decide their houses are a bit too big and decide to downsize. There are major financial benefits to doing so, but there are also some hidden downsides that most people overlook until it’s too late.
One of the more confusing topics during this time is your home insurance. Will downsizing lower how much you pay on your monthly premium? What else should you know before buying a smaller house? Keep reading to discover the answers!
Can Downsizing My Home Lower My Insurance Premium?
Downsizing your house usually leads to lower insurance payments. Reasons for this include the fact that less space needs to be insured and that the new home may have fewer things in it that typically drive premiums up.
The general goal of any homeowners insurance plan is that, if necessary, you could repair or replace the entire house if something catastrophic happens. Because of that, you need to have enough coverage to match the size of the house. Smaller houses are cheaper to repair or replace, so you can get a cheaper coverage plan than you previously had.
On top of that, the new residence may lack some features that were driving your premiums up. For example, it’s not uncommon for parents to buy swimming pools when their children are young and then move to a smaller home when the kids have all moved out. If the new house doesn’t have a pool or anything else that potentially drives the costs up due to enhanced liability risk, then there should be a lower premium.
Other Advantages of Downsizing
Still on the fence about downsizing? Like most major decisions, it has both advantages and disadvantages you need to know about before you finalize a decision.
To help you make that decision, we’re going to take a closer look at the advantages you may experience when you downsize a house.
The most obvious benefit for those who downsize their homes is that their mortgage usually goes down. Having a smaller house may mean having a smaller payment each month, and this brings advantages all on its own. For example, older homeowners might have an easier time in retirement, and homeowners of any age will have an easier time saving money for things like special vacations or other events that create lasting memories.
Along with a lower mortgage, a smaller house also means paying less in taxes. The square footage of a residence is the primary factor in determining how much the owners pay in property taxes each year. Therefore, having fewer square feet means you have less of a tax burden each year.
Lower Utility Bills
These days, one thing almost everyone has in common is being annoyed by their monthly utility bills. When you’re dealing with both colder winters and warmer summers than you are used to, it means that a big home will be expensive to heat and cool. Since heating and cooling account for about half of your energy costs, getting a smaller property helps you instantly lower your utility bills from month to month.
One reason many downsize their house is that they realize they have turned their large space into a glorified storage room. If you are surrounded by things you should have thrown away years ago, then moving into a smaller residence will give you the perfect opportunity to finally donate or get rid of the excess items.
The final benefit for those who downsize their home is the simplest, but it might also be our favorite: less maintenance! When you have fewer rooms and less overall square footage, it’s easier to do things like clean the bathrooms and mop the floor. This means you’ll also have more energy from day to day.
What Are the Possible Disadvantages of Downsizing?
There are two primary disadvantages of downsizing. These include the selling process and the need to make lifestyle changes.
On paper, selling your old home may sound easy, but remember that you’ll need to juggle selling the old place with finding and buying a new place. This can be stressful and may create a situation where you need to find a temporary place to live between the sale and closing of a new house. The fact that selling may be more expensive than you imagined can make it even more stressful.
The other big disadvantage is making the necessary lifestyle changes. Getting used to living in a much smaller space can be difficult, and it may be harder to do everything from throwing parties to having overnight guests. Ultimately, it’s up to you to decide whether these disadvantages outweigh the potential advantages when you downsize.
Should I Stick With the Same Insurance Carrier?
Downsizing to a new home is the perfect opportunity to shop around for a different insurance company. This is because finding a new carrier will help you experience even more savings after you move to a smaller house.
Your existing carrier will certainly be happy to cover your new house. However, if you’ve been using them for years, you may not realize that other carriers might offer you better deals and discounts on your monthly premium. By taking the time to shop around and get quotes from a variety of carriers, you can make sure that you are getting the best possible price.
Protect Your New Home with the Best Insurance
Now you know how your insurance will be affected if you downsize your home!
At InsureOne, we’re here to give your new home the protection it deserves. Get a quote online, give us a quick call at 800-836-2240, or feel free to come into one of our nearby offices at your earliest convenience!