9 Factors Affecting Home Insurance Premiums

Home insurance can seem complicated, but it really is simple when you think of it. If your insurance company determines that insuring your house would be very risky, your insurance premiums will be higher. On the other hand, if insuring your home doesn’t seem like an important risk, your premiums will be lower.

Here are 9 factors affecting home insurance premiums:

Factor #1: Your home’s replacement cost

The more expensive it would be to replace your home and your belongings, the higher your monthly home insurance premiums will be. The square footage of your home will also influence your premiums, as a bigger house with more furniture and appliances would be a lot more expensive to replace than a small house.

To determine your premiums, your insurer will estimate how much it would cost if your home needed to be repaired, or if it had to be rebuilt at the same location.

Factor #2: The age of your house and of its roof

The age of your house and of its roof are common factors affecting home insurance premiums. Generally, home insurance premiums increase as a home ages. If your home is old, your insurer will consider it as being more risky to insure than a brand new construction.

Similarly, the age of your roof will influence your premiums. If it has been more than 20 years since your roof was installed, your insurance premiums will be higher.

Replacing your roof could then be a worthy investment if it can lower your premiums.

Factor #3: Your home’s plumbing and electricity

If your home is old, your plumbing system and your wiring are probably aged as well. Old lead or galvanized pipes are more likely to crack and leak than more recent pipes, and a home with an old wiring system is more likely to eventually suffer some fire damage.

By updating your home’s plumbing and electricity, you could lower your premiums, while also keeping your home and your family safer.

Factor #4: Whether or not you have a wood stove

Wood stoves can be great, but they can also be dangerous if they are not installed, used, and maintained properly. Homes that have a wood stove are more at risk of burning, and their inhabitants are more at risk of suffering from carbon monoxide poisoning.

If you want to get a wood stove, or if you are considering buying a home that has one, you might want to talk to your insurer to see how this could affect your premiums.

Factor #5: Whether or not you have a security system

Is your home protected by a security system and a fire alarm? If so, make sure your home insurer knows about it, as it could lower your premiums since your home will be considered less risky to insure.

If you don’t already have a security system in place, make sure you get one installed, and choose one that will be monitored by an outside service.

Factor #6: The neighbourhood where you live

The neighbourhood where your home is located could also affect your insurance premiums. Once again, this is all about risk.

If you live in a neighbourhood that has a high crime rate, your insurer will assume that your property will have more risk of getting damaged.

And if other homeowners living in the same neighbourhood have made a lot of costly home insurance claims in the past, this could also affect your premiums.

Factor #7: Your home’s proximity to risk factors

A neighbourhood with a high crime rate represents a higher risk, but so does a home located near a large river that can cause flood damage, or a house in a remote location where forest fires are frequent.

Any potential risk factor will be investigated by your home insurance company, and your premiums might increase or decrease accordingly.

Factor #8: Your home’s proximity to a fire station

The closer your home is to a fire station or a fire hydrant, the sooner an eventual fire could be put out by firefighters. And the sooner a fire could be put out, the less expensive it would be to repair damages.

Therefore, if you live in a remote location that is far from fire stations and fire hydrants, the price of your home insurance premiums is sure to increase.

Factor #9: Your personal claims history

Finally, if you have never made any home insurance claim, your premiums will probably be lower. On the other hand, if you have made claims in the last few years, expect to pay higher premiums.

Your insurer could also consider your home’s entire claims history, which means your premiums could go up if the home’s previous owners have made many claims in the past.

If you are unsure, don’t hesitate to ask your home insurance broker to explain you the different factors that are influencing your premium prices.