Business Insurance News & Views

Important factors that impact your home insurance rate

There are many factors that go into making up the premium for home insurance.  These are known as rating factors. We will talk about the discounts and the factors that increase your price in a later blog.  Today we will focus on some basic factors that you may have little to no control over that figure into the calculation of your home insurance premiums.

The home itself is a factor in the price.  The age of the home, size (in terms of square footage), the location, the postal code, the heating, roof, plumbing and electrical updates all factor in.  Some factors are dependent upon how old your house is.  Most insurance companies offer a newer home credit.   Travelers Canada  will give a credit for a home 19 years of age or less.  When the home is brand new it will generate the highest discount but the savings decrease each year as the home ages.  The hot water tank is another one of these factors.  Since older hot water tanks can leak, the water can damage your basement and cause an insurance claim. So, the newer the hot water tank, the more money you can save.

Insurance companies also look at the age of the homeowners.  Most companies will factor the policyholders age into their pricing and credit is often given for those age 50 years of age and over.

The construction of the home is another factor.  Many older homes are solid brick compared to new homes which are brick veneer or siding.  A solid brick home is considered a sturdier construction, and will generate the best price.  Location is also a vital rating factor – some clients have found this out the hard way by moving only a few blocks away resulting in an increased premium.

The size of the house is one of the most important factors in determining the rebuild value for the home (i.e this is the amount of insurance you need on your home).  Many people are confused about this topic since they usually pay MORE than the rebuild value when they purchase their home. When you buy a house the purchase price includes the building and the land value, but for insurance purposes, insurers only look at the component related to the building/structure on the property.

Your stability as the homeowner is also taken into account – living at the same property for many years is a positive factor. Most companies have a mortgage free discount and some type of valued customer rating based on their credit score which we will further discuss in our next blog.   Your previous claims history, as well as your due diligence in maintaining continuous property insurance are also important in the rating process.