How much does home insurance cost?
The average Canadian household pays $960 per year for home insurance. Individual premiums are based on wide-ranging factors such as a home’s size, type, replacement value, location, age, construction quality, building materials, security features and proximity to a fire hydrant or fire station. Major home insurance companies and independent insurers also consider the value of a home’s contents and how the property is used (say, if you have tenants or operate a business on-site). They also look at aspects related to homeowners themselves, such as age and claims history.
Your premium will also depend on your level of coverage. Below are the four policy options, from most to least coverage. Note that whichever type you get, valuables like jewellery, furniture, art and sports gear typically have coverage limits, so you may want additional insurance for these.
- Comprehensive: This policy type covers a dwelling and its contents for all risks except certain exclusions. Examples of commonly insured perils: Fire, theft, lightning and explosion. Examples of uninsured perils: Preventable or predictable events, such as floodwater damage in flood-prone areas, landslides and other earth movements, and damage from frozen indoor plumbing. Optional coverage is available for certain disasters such as earthquakes, water damage, ice damming and sewer backups. Home insurance typically includes personal liability, in case you unintentionally cause bodily injury or property damage to others (except for members of your household) at home or elsewhere. (Here’s how to know if you need flood insurance.)
- Broad: Broad policies include comprehensive coverage for your home (all risks except for certain exclusions) and “named” perils coverage for its contents (stated risks only).
- Basic, standard or named perils: The name of this type varies, but this type of policy covers only the insured perils named within it.
- No frills: Basic coverage for homes that don’t meet normal insurance standards due to physical damage or other problems. A no-frills policy doesn’t cover perils.
How to get lower home insurance
You can tackle your home insurance cost on multiple fronts, from making home improvements to working with an insurance broker. Here are several strategies to try.
How a new furnace or roof can lower your premium
Home improvements could mean cheaper insurance, particularly if you make these updates and upgrades:
- Roof: The age and condition of your roof affect your premium. “A roof should be replaced or updated as soon as there’s any wear and tear, to prevent water damage to the house,” says Debbie Lo, an account executive at Pacific Insurance Broker in Richmond Hill, Ontario. “This can be every 10 to 15 years, or even 20 years if there have been updates.”
- Electrical wiring: Many insurers require copper wiring because it’s less likely to cause a fire than outdated aluminum or knob-and-tube wiring. And if you have an older home with 60-amp service, upgrade to 100-amp service, to avoid overloading (it’s worth noting that many insurance companies will only temporarily insure a house with 60 amp service until you upgrade).
- Plumbing: Copper, PVC or plastic pipes are less prone to buildup, corrosion, leaks and breakage than older lead, galvanized steel or clay pipes.
- Home heating: Electric heat and forced-air gas furnaces are safer than oil tanks and wood stoves. A furnace can last 15 to 25 years, but replace yours if it’s starting to struggle.
- Sewer backup valve: Installing this will help prevent a toxic and costly mess in your basement.
- Sump pump: Flooding will likely become a bigger problem as the climate warms up. Having a sump pump—a pit under your basement that collects rain and flood water—can lower your premium.
- Alarm system: Protect your home by installing a burglar alarm and fire alarm system. To qualify for an insurance discount, the system must be centrally monitored by a third party.
Are home upgrades worth the insurance savings?
Home updates may be an added expense in the present, but they will still result in savings. Not only can they help you to avoid the headache of dealing with damages, but they’ll lower your chances of having a claims history (which can raise rates), too.
Having updates done to your home also allows you to have your pick of insurers. Some insurance companies have update requirements, and being behind on those could narrow your choices when shopping for providers. “I encourage my clients to have them updated so that they have more flexibilities with the insurance companies they get to choose from,” says Lo. It would be a shame to have to turn down a great deal simply because you don’t meet the requirements.
Bundle your home and car insurance
When clients ask how to get lower home insurance, Lo suggests they insure their home and car together. “That’s a pretty big discount right there—10% to 15%, maybe even 20%, and you’re getting a discount for the house and the car.”