In this article, we’ll provide you with the information you need to know about the price of your home insurance premium. You’ll also learn a few tips that may lower the cost. Let’s begin with how companies calculate your premium.
Home Insurance Premium
Your premium is how much you pay to insure your house. This amount is often calculated for a year term; you can pay it monthly, annually, or a determined period. To determine your premium, an insurance company looks at various factors to see how risky it is to insure your house. For example, you can go to brokerlink.ca/insurance/home to discover the main factors that affect risk and coverage. Below we go over the most common factors that affect the cost of your home insurance.
Continuous Property Insurance
The longer you have home insurance without making a claim can lower your premium. Having a continuous policy tells your insurance provider that you can handle the risks of renting or owning a home.
This cost is a significant factor in the price of your premium. The more expensive it is to replace your home, the higher your premium will be. Most companies will use an insurance-to-value calculator to figure out how much it’ll cost to rebuild your house. If you somehow lost your home, having the protection that matches your house’s value will prevent you from being caught short.
Your house’s location is also factored into the cost of your premium. The insurance provider you choose will look at the cost, the type, and the number of claims in your area. You can expect to see higher prices if you live in a natural disaster-prone area or a bad neighborhood. Companies do this to assess the possibility of potential claims and will sometimes limit coverage in your area.
Age and Construction Material
Your home becomes more susceptible to risks the older it gets, and this causes premiums to rise. Newer homes, as well as those made from brick or use fire-resistant materials, will most likely have lower premiums, though they can increase as your home ages.
Homes that have more square footage are more expensive to insure. This price increase is because more space and belongings would need to be replaced after a loss.
Proximity To Fire Halls and Hydrants
How close your home is to a fire hall or hydrant affects the amount you’ll pay. If you live closer to one of these, your home can be saved more quickly, reducing the amount of damage. Often, companies look to see if your home is within 8 kilometers of a fire hall and 300 meters of a fire hydrant.
Renovations and Improvements
When you add to your house, you increase the amount of coverage you need, increasing your rate. It’s essential to speak with your insurance provider before starting renovations to ensure you’re covered throughout the process.
A way to help lower your premium is to reduce the chances of loss and damage to your home. Some things you can do are:
- Keep up With Maintenance: Insurance companies want to see that your residence is well-maintained. You can do this by having leaks fixed, fence repairs, pest control, and other upkeep activities.
- Get a Home Security System: Having both fire and burglar alarms can cause your premium to decrease.
- Keep Your Home’s Plumbing, Electrical, and Heating Systems Updated: This will keep you safe and reduce the risk of having problems.
- Reduce Your Risk of Water Damage: You can do this by adding water sensors, alarmed sump pumps, and backwater valves.
If you have low or no claims, you can often get a reduced rate or a discount. Claims are on your record for five years, but some companies will give you a discount if you don’t make a claim in 3 years.
A Wood-Burning Stove
Wood-burning stoves increase your insurance rate due to their high risk of fire and carbon monoxide poisoning. Many insurance providers will have your stove inspected before they provide protection. Some will also require a Wood Energy Technology Transfer (WETT) certification and a professional installation.
Several factors increase your home insurance premium; we only listed a few in this article. Through the tips we offered, you can reduce your rate and save money. Overall, having a home insurance policy is beneficial to keeping your house and belongings safe.