What Can Affect Your Home Insurance Premium?

Home insurance premiums are influenced by a wide range of factors.

What Can Affect Your Home Insurance Premium?:

Insurance companies use these variables to assess the risk of insuring a property and to determine the appropriate premium. Here's a comprehensive list of factors that typically impact the cost of home insurance in Canada:

🏠 Property-Related Factors

1. Location of the Property

   • Risk of natural disasters (floods, wildfires, earthquakes)

   • Crime rates in the area

   • Claim rates in the area

   • Accessibility to the nearest fire station or fire hydrant

2. Type of Home

   • Detached, semi-detached, townhouse, condo, etc.

   • Construction materials (e.g., brick, wood frame)

3. Age of the Home

   • Older homes tend to cost more to insure due to outdated systems and higher likelihood of claims

4. Home Size and Replacement Value

   • Larger and more valuable homes cost more to rebuild and insure

5. Roof Age and Type

   • Older roofs or those made from high-risk materials may raise premiums

6. Plumbing, Electrical, and Heating Systems

   • Type and age of these systems (e.g., knob-and-tube wiring, aluminum wiring, Wood-burning fireplace, poly-b pipe, oil heating, etc can increase risk)

7. Special Situations

   • Properties such as heritage homes or former grow-ops (weed houses) may also affect premiums

8. Additional Amenities in a Detached Home

   • Such as an outdoor pool, sauna, spa, or tennis court—may affect the insurance premium

🧰 Coverage-Related Factors

1. Coverage Amount

   • The higher the insured value, the higher the premium

   • For stratified multi-family buildings, the higher the strata deductibles under the strata policy, the higher the unit coverage amount you need to insure for your unit—resulting in a higher premium

2. Type of Coverage

   • Basic (Named Perils) vs. Comprehensive (All Risks)

   • Additional endorsements (e.g., sewer backup, earthquake, overland water, etc)

3. Deductible Amount

   • A higher policy deductible typically results in a lower premium

4. Add-ons or Optional Coverages

   • Home-based business coverage, jewelry riders, cyber coverage, etc.

👥 Policyholder-Related Factors

1. Insurance History

   • Frequent and/or large past claims can significantly increase your premium

   • More than 5 years of continuous home/tenant insurance without a break and with no claim history may qualify you for additional discounts, resulting in a lower premium

   • A cancellation history by the insurance company—such as for non-payment or non-sufficient funds—may result in a higher premium or affect your ability to obtain insurance

2. Credit Score

   • In most provinces (except Newfoundland & Labrador), a good credit score can help lower premiums

3. Occupancy Type

   • Primary residence, rental property, secondary home, seasonal home, or vacant

4. Number of Unrelated Individuals or Families Living in the Home

   • May influence liability exposure

5. Mortgage Status

   • Whether the property has a mortgage or not will affect the insurance premium

6. Owner's Age (based on Date of Birth)

7. Owner's Residency Status

   • A landlord who lives outside the Lower Mainland of the rental property will affect the premium

🔐 Security and Risk Mitigation

1. Security Systems

   • Central monitored alarm systems

2. Fire Suppression Systems

   • Sprinklers (automatically applicable to condominiums)

📍 Provincial and Market Factors

1. Province/Territory

   • Each province has different risks and regulations

2. Insurance Company Pricing Models

   • Each insurer has its own underwriting criteria and rate algorithms

3. Replacement Cost Inflation

   • Costs of materials and labour can affect the replacement value and thus the premium

   • Tariffs may affect the cost of materials

4. Taxes

   • B.C. has no sales tax on insurance, but other provinces, such as Ontario, apply an 8% tax on insurance

In Summary:

Due to all the factors that influence home insurance premiums, even a simple change in property ownership can result in a different premium.