Did you ever wonder why you pay more for home insurance than your neighbour? Or your uncle up north? Insurers consider a huge number of factors when determining your rate – some regional, some historical, some personal. Knowing what they are may help you save some dough.
1 Neighbourhood Insurers keep statistics on claims across the province, and every theft, fire and storm is recorded and calculated into rates. So if you live in a neighbourhood that’s prone to break-ins or sewer backups, your rate will reflect that.
2 Heating system Oil and wood-burning heat come with an increased risk of fire, so you may pay more for insurance if your home has one of these systems, as opposed to forced-air, gas or electric heat.
3 Plumbing Modern copper or plastic pipes are generally more desirable, from an insurance perspective, than galvanized or lead pipes, because the latter are more susceptible to leaks and cracks.
4 Roof age and warranty A staggering 60 per cent of AMA’s weather-related home insurance claims are a result of roof damage. The age of the roof, but also its warranty and quality of construction, may affect your rate. Keep in mind that most companies will only pay for the depreciated value of a roof, as opposed to the full replacement value.
5 Electrical system Outdated electrical systems with knob-and-tube or aluminum wiring and 50-amp service have a higher risk of overloading and catching fire. If your home was not built in the last 20 to 30 years, you may need to upgrade to safer copper wiring and 100-amp service before you can get insurance at all.
6 Distance to water and fire halls The closer your home is to firefighting aids such as hydrants and fire halls, the lower your rate is likely to be, because every extra minute of response time can affect the extent of fire damage.
7 Size If you live in a three-storey house, chances are you have more stuff than someone who lives in a small townhouse – which would mean more to rebuild, replace or repair in the event of, say, a fire or flood.
8 Usage If you run a home-based business, you’ll pay more for insurance, to cover office equipment and inventory. Home insurance policies come with a personal liability component, too, so insurance companies look out for property usages that might present risks, like trampolines and pools.
9 Claims, coverage and deductible The higher your deductible – the amount you agree to pay upfront in the event of a claim – the lower your insurance rate. A higher deductible also tends to reduce the number of small claims you make, keeping your claim history clear, which in turn contributes to keeping rates down.
10 Special discounts There are a few other ways you may be able to reduce your home insurance premiums. Installing monitored systems that detect fire and/or break-ins can usually net discounts. These systems can either be centrally monitored or locally alarmed. Some insurance companies also offer claim-free, mortgage-free or age-50-plus discounts.
Published in Westworld, Summer 2014