A great way to learn about home insurance and how to get the right coverage versus the premiums you pay is to know what the rate factors are.
There are a lot of things that insurance underwriters look at that can affect your premiums.
Your home insurance is composed of property and liability coverage. The property portion is the house, occupants’ possessions, and appliances. Liability is to protect your family from law suits related to things like slips and falls, fires or other accidents.
Keep in mind that each insurer has their own assessment of risk, based on their own claim history and understanding of the risks.
Price of home: This is the replacement value in dollars, but it is not the same as market valuation or tax assessed value. If you do renovations it will increase the value of the home and increase your premiums.
The size & type of home: Refers to whether it’s a detached or semi-detached house, square footage, and how many rooms.
Type of neighbourhood: Refers to theft, fire and other risks where claims have been made in that neighbourhood.
Age of roof: Pertains to the condition of the roof.
Uses of home: If the home is used for a home office or the attached garage as a repair shop.
Claim history and credit history: This refers to whether you have made previous claims on your credit rating.
Deductible: The higher your claim deductible, the less risk insurers feel to insure your home.
Type of plumbing: This would refer to the risk of water damage from water pipes. Across the land flooding is not covered.
Type of wiring: This relates to the risk of overloads or fire from electrical current
Type of heating: If you have oil heating, it is considered more risky, where gas and electrical heating aren’t.
Accessories: Wood stoves, fireplaces, swimming pool, hot tubs, they all raise risks to the occupants and visitors.
Home alarm system: Having an alarm system installed deters theft and therefore lowers possible claims because of intruders.
Attached structures: Garages or sheds that are attached increase risk to the home therefore premiums may rise if you have them next to yours.
Dogs: There are over 400,000 dog bites in Canada each year and the payout for injuries is in the hundreds of millions of dollars.
Most of these factors, you won’t be able to do much about. I’m sure you’ve heard about people taking their pool out, penning their aggressive dog, or other rather expensive changes to the home. But whether you’d want to bear that cost is questionable.