Determining the Cost of Home Insurance
Huestis Insurance Group • Jul 18, 2020
Determining the Cost of Home Insurance
Your home is your biggest investment and it’s important that it's protected from risks and losses which you cannot afford to cover yourself. Changing weather patterns and climate, including wildfires and windstorms, have caused claims to be more frequent and severe. As technology develops, insurance companies are better able to predict when and where losses will happen, as well as how much damage may be caused. Factors impacting the cost of your home insurance include:
Replacement Cost
Generally, home insurance is designed to rebuild a home with materials of like kind and quality including labor and cleanup of debris from the loss. The cost to replace your home, will reflect in the cost of your home insurance policy.
Home Construction and Updates
Insurance companies prefer newer and/or updated homes. Consider that older electrical panels or wiring can be a risk factor for fire, and that aged plumbing can be a risk factor for cracked pipes and subsequent water damage. The greater the risk, the higher the cost of insurance. Most insurance companies also prefer that asphalt/fiberglass roofing shingles are no older than 20 years, regardless of the branding stating otherwise as our climate and windstorms events have been causing roofs to age much more quickly.
Location
Every community has unique risk factors. Flood zones, proximity to water, service and water line infrastructure, distance to hydrants or fire halls, and population density, are all considered by insurance companies and are reflected by the rate.
Claim Frequency
While policies cover everything from the loss of shingles in a windstorm to a devastating fire, it is not in your best interest to make small claims that you can afford to cover yourself - home insurance is designed to protect you against financial hardship. Insurance companies allow significant discounting for clients who are claims free, and may review your eligibility for insurance if you have a high claim frequency.
Credit Rating
Some insurers give you a discount on your home or insurance if you allow them to view your credit score through a soft credit check. Insurance companies have long maintained that there is a strong correlation between credit scores and increased insurance risk. In Nova Scotia, New Brunswick, and PEI consent is given when signing an application.
A soft credit check is a way to obtain information from a person’s credit report without impacting their credit score.
Heating
Oil spills and misuse of solid fuel appliances are a significant risk to insurance companies. Therefore, homes with oil tanks and wood heat will cost more to insure than homes with preferred heat, such as electric in-floor or baseboards.
It is important to note that while mini-split heat pumps are becoming a very popular source of heat, most insurance companies do not accept heat pumps as primary heating systems unless they are ducted and thermostatically controlled. Insurance companies require a thermostatically controlled backup source of heat, such as electric baseboards, or furnace which can run without intervention. Additionally, if you install a heat pump and use it primarily, but still have an oil furnace or woodstove connected to your home, you will still be charged rate on the greatest heating risk as oil spills and losses resulting from your woodburning appliance can still occur.
Ways to Save:
Increase your Deductibles
A deductible is the amount you pay towards repair of your vehicle after an insured accident or incident. Higher deductibles on your policy will mean lower annual insurance rates. While a policy with a $2000 deductible will cost less per year than one with a lower deductible, consider whether it is realistic and affordable. Deductibles range from $1000 to $5000 per loss type and may vary by carrier.
We caution you to choose deductibles that you can afford. If a tree falls on your home, can you afford to pay $2000 towards the repairs before your insurance will step in?
Combine your Car & Home Insurance
Some companies offer up to a 15% discount for combined policies.
Review your Discounts
Did you know that most companies offer the following discounts: Mortgage Free, Non-Smoking, Preferred Oil Tanks (i.e Fiberglass, Roth), Unfinished Basement, Hot Water Tank.
Talk to a Broker
Insurance Brokers have multiple options and insurance carriers to work with and compare on your behalf. Reviewing your file regularly to report any home updates is important to keep your rate and coverage current. As the trend of higher insurance rates pushes forward, an Independent Insurance Broker will help you navigate and control the rate you pay. Huestis Insurance Group is Atlantic Canada's largest Independent Insurance Broker and is backed by the best insurance companies in Canada.
Wildfire Preparation
Insurance is not tangible - you can’t hold it, see it, or feel it. For this reason, it may be tempting to reduce coverage in order to save some money; but, insurance can be invaluable – especially if you’re on a fixed budget.
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Huestis Insurance Group is made up of community based insurance agencies located right in your neighborhood. We are local people who understand your insurance needs. We offer you Service, Choice, and Advice with the backing of Canada’s largest insurance companies.
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