Home ownership is a symbol of success and of the Canadian dream. However, it also makes you susceptible to additional costs. Home insurance protects you from a number of physical damage risks such as fire, theft, hail and windstorm as well as personal liability lawsuits.
The premiums you pay for home insurance protection are based in part on the funds paid into the insurance pool less any claims for losses that policy holders experience. Your premiums are also based on the insurer’s calculation of the risks to your home. As everyone does not pay the same amount for home insurance, there are steps you can take to reduce your risk of needing to bring a claim, which will in turn reduce your premiums.
The main aspects considered by insurers in determining your home insurance policy rate include the location of your home, costs to rebuild, the age of your home, any special features, your home’s use, your claims history and credit history. Your age, whether you are mortgage-free, and how long you have resided at the address are also considered by insurers as are your insurance needs. These are all explained in detail below.
The Location of Your Home
The first factor any insurer will consider is location. There are higher risks in some neighbourhoods or communities that lead to higher premiums, such as where crime rates are higher, the infrastructure is poor (e.g., sewer system), adverse weather conditions or there is too much distance and isolation from other homes. Conversely, being closer to a water source (e.g., a fire hydrant) and fire station will often lead to a reduction in premiums.
The Cost to Rebuild Your Home
Your insurance premium will depend in part on the cost to rebuild your home if it were completely destroyed, such as from a fire. As a result, premiums are higher for a luxury home with high-end fixtures, materials and valuables.
Keep in mind that the rebuilding costs often differs from the home’s purchase price because it includes factors such as rising or falling construction costs in the area and debris removal, however it does not include the actual value of the land itself. Included in the cost of rebuilding is the labour cost, building materials and accessibility of the property as well as any special costs incurred from bylaws or hiring specialty contractors.
The Age and Condition of Your Home
Newer homes typically have lower premiums because the plumbing, wiring and roof are in prime condition, which typically means much fewer claims. Older homes sometimes have inferior or degrading materials that may cause problems. If your home uses oil as its primary heat source and wood for secondary heat source, you will also face a higher premium because of the risk of fire loss.
Preventative measures can help to reduce your insurance rate, including using a monitored home alarm system service and installing a sump pump and back water valve.
Special Features of Your Home
Homes with pools typically cost more to insure because of the added dangers and third party liability risks. As well, homes with unique architectural features tend to cost more in insurance because they could be costly to replace or repair.
Insurers also consider the material that your home was constructed with. Almost all homes are built from a wood frame but exterior siding can also play a part in the rating factors as some are more fire resistive than others such as hardy board. Also homes made entirely of wood such as log cabins are not only much more flammable but are also very difficult to rebuild and often require major reconstruction.
Your Home’s Use
You may think there is only one way to use a home – by living in it, but there are a variety of ways people use their homes that can affect their house insurance in Edmonton. For example, vacant homes are more likely to be broken into and vandalized, so the premium is higher. Homes that are also used for business are also be subject to a higher premium, as the assets of the business will also require protection under the policy.
Many homeowners rent out a basement apartment or a room in the home as a source of income. Before doing so, check with your insurance broker on how this will affect your insurance, as your home may be considered a multi-family dwelling, which also rates your insurance rate.
If you live in a neighbourhood that has been hit by a high number of tornadoes or burglaries, you might face a higher home insurance rate.
Your own claims history will also impact your premium, especially if you have a pattern of home mishaps and claims. On the other hand, if you’ve been a responsible homeowner for years, you insurer will tend to reward you with a lower rate. Many insurance companies offer discounts based on the number of years you have been claim free under your home insurance policy.
Your credit score also affects your insurance rate. If you have had financial difficulties or are having trouble paying your bills, you may be seen as being unable to maintain repairs and general maintenance on the home, leading to a greater risk of damage and claims.
Your Age, Mortgage Status & Length of Time You Have Lived in the Home
Older owners who are mortgage-free and have lived in the home for a long time tend to have fewer claims. It may be viewed by the insurer that, because of these factors, you having more funds available for the proper upkeep of the home, which can reduce the risk of a major claim.
Your Insurance Needs
The amount of insurance you need in Edmonton will affect your premium. A luxury home will cost more to insure, for example, than a more modest home. A rider that insures high valued items separately will also cost more than otherwise.
Your insurance coverage and deductibles also affect your premiums, which can be lowered by increasing your deductible, bundling your home and auto policies and shopping around for better rates. Speak to our home insurance brokers in Edmonton about finding a competitive rate based on your circumstances.
How MBS Insurance Brokers Ltd. Can Help
Whether you are in the market for your first home insurance or you are concerned about increases in your insurance from a prior insurer, we can help you to find affordable insurance protections that you need. At MBS Insurance Brokers Ltd., our home insurance brokers in Edmonton are committed to providing excellent customer service and can help you when you need to make an insurance claim. We partner with the best insurance policies in Canada and represent only financially stable insurance companies. Contact us for insurance in Edmonton today, at 780-436-7880.