Whether your current policy is up for renewal or you’re about to close on a new place, there are a few ways to keep your premiums manageable. But first, it’s important to understand which factors can affect your overall rates.
Insurance premiums aren’t always about a home’s physical structure as it is about location. For example, a small townhouse in downtown Toronto could be more expensive to insure than a larger detached home in rural Stouffville. Why? Just think about how much more damage a fire could do in a densely populated area where homes are built close to each other.
Location reveals a lot about the potential risk of your home. Insurance companies are also looking at your home’s proximity to a fire hydrant or fire hall. Location can indicate whether you’re in a high-crime area, too. Your insurance provider will set your premiums higher to account for possible burglary, vandalism and other crime-related claims. It’s good to note that having an alarm system in place can help lower those premiums.
Age of your home
Newer homes can be cheaper to insure — this can be especially true if your property is under 10 years old. The assumption is that newer homes are constructed with modern materials, so they’ll generally have fewer issues.
The state of your roof, for example, is a major cost determinant. The last time your roof was replaced and what materials were used are often questions that insurance companies will want the answer to. Some companies will offer discounts for ‘impact-resistant’ roofing materials like aluminium and steel. Providers will also ask about your electrical system; circuit breakers usually cost less to insure than fuse boxes.
Value of your home
The market value of your property will also affect your premiums. Coverage included in your policy will address the cost to repair or rebuild your home if it’s damaged by a covered peril, and the limits of this coverage is often determined by multiplying the square footage by local construction costs.