Use Your Tax Refund to Earn Savings on Insurance


April 15 is looming. By now, many of you have filed your federal and state taxes (the rest of you should get cracking) and are waiting for some long-anticipated checks in the mail (if you haven’t gotten your refunds already). The average refund this year, according to the IRS, is roughly $3,034, and more than $146 billion had been refunded by the U.S. Government as of the end of February.

Rather than blow that nice chunk of change on a brand new flat-screen or a down payment on a car, we’ve got some smart ideas for how you could invest your refund in your home in order to earn even more savings on insurance.

Update your roof

Once the roof of your home is compromised, you’re vulnerable to a large number of extremely expensive perils including wind and water damage. A new roof is less likely to have holes, leaks and other signs of wear and tear that could lead to big insurance claims, and it’s also more likely to withstand strong winds, hail and other severe weather conditions.

That’s why many insurance providers offer discounts of up to 10% for policyholders who update their roofs with impact-resistant materials in order to help lower their risk of filing a costly claim. When you add up this discount plus the thousands you’ll save by avoiding a claim, your tax return could prove a hugely valuable investment when used to update your roof.

Rewire the house

While you’re thinking about updates, consider how an out-of-date electrical system could also cause your premium to skyrocket through even a new, impact-resistant roof. In the U.S., a residential fire breaks out every 82 seconds, according to the National Fire Protection Association, and the average cost of a fire-related claim clocks in at more than $33,000.

New wiring and updated systems are significantly less likely to contribute to fires and expensive claims than older equipment such as fuse boxes and ungrounded power outlets. For this reason, most home insurance providers reward the reduction in risk that comes with updated electrical systems with significantly lower premiums.

Invest in a security system

This is a relatively small investment that’s easy to install and offers a large number of benefits. For one, you’ll have peace of mind that the people and things you love are protected around the clock. Second, insurers reward responsible investments like this with discounts of up to 10%. Third, many security systems include safety devices in addition to burglar alarms, such as fire and smoke detectors, that could earn you discounts of 5%.

It’s a good idea to speak to your insurance carrier before investing in these systems, since some providers may have specific requirements for discounts.

The takeaway here is simple: While it’s easy to give in to the instant gratification of spending your tax refund on an updated TV or computer, you could actually increase your return exponentially by investing in your home.

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