Your biggest investment is likely your home. Insurers look at risks to figure out how likely it is that you, and other homeowners with similar circ*mstances, will experience a claim and how much it will cost to repair or replace your home and its contents.
Every insurer takes different factors into consideration when developing coverages and pricing policies. Knowing how rates are set can help you find an insurer and policy that best suits your needs. Understanding common risk factors – and acting to help prevent them – can help you better manage property insurance costs.
Working with a home insurance representative who understands your requirements can help you choose the types of coverage for your property.
7 factors that determine your rate
What’s the replacement cost?A home’s size, how and where it is constructed and the value of your contents significantly affects what you pay for home insurance.
Your home insurance covers personal belonging such as appliances, clothing, furniture and electronic equipment. Some items – such as fine art, jewellery and collections – are subject to specific limits.
How well maintained and updated your home is. Insurers want to know what updates have been made to:
Electrical. Because outdated electrical systems and components can cause a fire, insurers will ask about knob-and-tube or aluminum wiring and fuses or service that’s less than 100-amps. Updated wiring, a minimum 100-amp service with breakers and/or a electrical inspection by a licensed electrician may be required.
Plumbing. Galvanized steel or lead pipes are more likely to crack and leak. Upgrading to copper or plastic plumbing can help you reduce the cost of insuring your home.
Roofing.It’s your front line of protection against the elements so insurers generally prefer that roofs are updated within 20 years. If your roof has reached it lifespan and leak occurs, the interior damage may be covered, but the roof damaged would not be insured. Remember home insurance is a not a maintenance policy. You still need to maintain and update your home.
Wood stoves. If not properly installed or maintained, wood stoves and fireplaces can cause fires and carbon monoxide poisoning. Talk to your insurer before you buy or rent a property with a wood stove. Your insurer may require an inspection. Wood burning appliances do affect the availability and affordability of home insurance.
What makes your property unique?Your house may have unique features or uses that are different than those of your neighbours. Your insurer will want to know:
Do you operate a home-based business?
Do you rent out all or part of your property?
Is your home a designated heritage property?
Do you have a burglar alarm, and smoke/carbon monoxide alarms? Are they monitored off site?
Do you own a swimming pool?
Do you have additional structures such as a pool house, separate garage or home office shed?
Where’s your property located?Across Canada, every neighbourhood is home to different types of properties and risks. Insurers track the number, type and cost of claims by neighbourhood to understand how likely it is that a future claim may happen. If you live in an area experiencing severe weather events causing an increase in claims the cost to insure homes in your neighbourhood may increase.
Where’s the closest fire hydrant and fire station?If you own a property that’s far from a fire hydrant or fire station, the cost to insure it may be higher. The sooner a fire can be put out, the lower the cost is to restore your home.
What’s your claims history? Yourpersonal claims historymay have an impact on your premium.Past claims are often an insurers' best predictor of future claims activity.
