Many different things can affect home insurance costs. Its age, features, construction type and cost to repair all affect how much you’ll pay for insurance. Insurers use a variety of considerations to assess your unique details and level of risk.
You must provide this information so insurers will have a more accurate assessment of your level of risk. The greater the perceived threat for you, the more you will pay for premiums. Here is the top considerations insurance used to calculate your premiums:
Location
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Where you live is a significant consideration. There are many things related to your location that have an impact on premiums:
- Your neighbourhood and postal code
- The crime in your area(break-ins, vandalism, stolen property)
- Proximity to water and flood plains
- Proximity to a fire station and hydrant
- Distance from emergency services
- Distance from an airport
- Weather conditions
Replacement cost (home value)
This is the amount it would be to rebuild your home to its current state. It is not the real estate value of your land. This amount is different for each dwelling. It includes things like building material, size, and key features. The larger and more valuable your home, the higher the value, and the most it will be to insure.
Property type
Your type of home will play a role in determining the type of coverage you need. The type of dangers for a single-family home can be slightly different than a semi-detached, rowhouse, townhome, or condo.
Construction type
How your dwelling is built, and the materials used (brick, veneer, siding, wood, concrete) can have a big impact on its safety and risk of damage. Some insurers may require a home inspection as part of the application process.
Electrical
Knob and tube and old aluminum wiring can be a serious fire threat. Make sure you have the proper amount of amperage based on your home size and power needs. When applying for coverage, your insurer may require you upgrade your electrical system.
Plumbing
Newer plumbing is more reliable. Insurers prefer copper piping, PVC, ABS or PEX piping over older galvanized steel, lead, or clay pipes. If you have more modern plumbing systems, you will pay less.
Roof
Your roof age and the materials used play a big role in protecting your home from weather damage. Modern roofing systems have better ventilation and use more durable materials. This prevents water and mould issues from developing.
Heating source
A forced air furnace and HVAC system is most common and preferred because it poses less of a threat than alternatives. Electric baseboards, radiators, fireplaces, and wood-burning stoves pose a bigger hazard because they are a greater fire risk.
Special use for commerce
Running a business out of your home can increase your risk greatly. Speak with your advisor if you need home-based business insurance.
Claims history
Too many can work against you and cost you more money. Avoid filing for minor issues that you can afford to pay without affecting your budget. Generally, if the amount is less than or relative to your deductible amount it’s not worth it.
Pools and yard accessories
A pool automatically increases your liability. There is more chance of injury and drowning. Other items that can increase payments include trampolines, climbers, and other structures. Learn more about pools and insurance.
Security system
Your will receive a discount by installing a centrally monitored security systems. Door and window monitors and security cameras can help ward off potential intruders.
Renovations and home improvements
When you make changes to improve your home, it will likely increase your costs. Additions, upgrades, and structural changes will increase your home value (and its replacement value). Renovations focused on safety and security can help lower your premiums.
Credit score
A strong credit score can work to your advantage. If you allow your insurer to run a soft credit check, you’ll be rewarded with lower premiums. If you have bad credit, they cannot increase your premiums. Insurers must get your approval before checking your credit score.
Pets
Having a pet can increase your liability. For example, if you have a dog breed that is known for aggressive behaviour, they are more likely to bite. The same applies to other exotic pets who are more likely to cause damage or injure someone.
Smoking
Having a household of non-smokers reduces the risk of a fire. If you do smoke, take additional fire safety precautions.
