8 Factors That Affect Your Home Insurance
Home insurance is an asset to have. It allows homeowners to rest assured that in case of anything unexpected, they will be covered. If your home has a mortgage or a line of credit attached, home insurance is mandatory. If your home is paid off completely, it is still always a good idea to have home insurance.
However, there are some things to consider before purchasing home insurance coverage in Ontario, and you, as a homeowner, should know the factors that affect it.
In this article, we’ll examine some of the factors that have an impact on your home insurance premiums, including the location of your house, its age and condition, proximity to fire services, insurance history, your credit score, heating system, and more.
1. Location
The location of your home is an important factor when calculating home insurance coverage in Ontario. Insurance companies consider the area you live in and collect data on the surrounding homes.
This data can include; the nature and cost of past claims, the frequency of claims in that area, the type of other homes in the area. etc. With this information, the insurance company will decide what your home insurance rate will be.
If the company believes that you live in an area that is prone to fires, flooding or in a high-crime neighbourhood, the home insurance cost may go up. If there haven’t been too many claims in that area, and if it is in a relatively safe location, the rates will normalize accordingly.
2. Age and condition
Another factor that insurance companies consider is how old the house is and in what condition. Older homes tend to be more vulnerable to problems like worn-out or damaged pipes, electrical issues, damaged roofing, heating issues, and structural problems.
In this case, the insurance cost will be higher as the building is more susceptible to damage from extreme weather conditions and other hazards.
In case you need to file an insurance claim, note that insurance companies do not cover damage caused by negligence or improper maintenance.
Therefore, as a homeowner, you need to make sure that the different systems of the house are up to the latest standards and that regular repairs are being carried out.
3.Size
One of the more obvious factors is the size of the house you want to insure. If you have a multi-story home, it may cost more to repair, replace, or rebuild in cases of fire or water damage. The larger the square footage, the more it will cost to repair or replace.
The larger the home, the higher the cost of home insurance generally, so keep that in mind when looking at home insurance coverage in Ontario.
4.Proximity to fire services/hydrants
Those unaware would be surprised to know that insurance rates can vary depending on how far your home is from the nearest fire station or fire hydrant. This is because insurance companies take into account how quickly a fire hazard can be addressed for a particular house, which depends on how far a fire hydrant or station is.
So, if your home is located within eight kilometers away from a fire station, or within 300 meters away from a fire hydrant, your insurance rates could be lower than houses located further away.
5.Insurance history
Your history of insurance and claims also affects the premium for your home insurance coverage in Ontario. If you’ve had a claim-free history for a certain period of time, you may be eligible for a discount on your home insurance. However, if you have previously filed a claim, your insurance rates can increase.
Keep in mind that insurance claims filed at a different residence will also be considered by the insurance company. Thus, if you’ve had a previous claim, but then decide to move into a new neighbourhood with relatively lower insurance rates, your individual rate could still be higher.
Still, the good news is that if you continue to stay claim-free for a certain number of years in the new residence, then you will be able to get your home insurance costs down.
6.Credit score
A good credit score shows dependability and credibility. Insurance companies look at your credit score to determine the level of risk. After all, they need to know that their customer will not default on payments, and the credit score is the way to assess that.
Credit score checks or history inquiries pulled for insurance purposes will not affect your credit rating. The better the credit score, often the lower the home insurance premium.
7.Heating systems
Having an oil or wood-based heating system in your home, which some houses do, affects your home insurance coverage in Ontario. Oil-based heating systems can be tricky and costly to repair in case of any leaks.
The leak can damage other parts of the house, as well as the system itself. Similarly, wood-based heating systems increase the risk of a fire hazard. As there is some risk associated with these heating systems, the cost of home insurance increases. There is normally a surcharge for having oil or wood-based heating systems.
8.Owning a swimming pool or hot tub
Having a swimming pool or a hot tub not only adds to the value of the home but also adds to the cost of insurance (though not by much). Insurance companies take into account that a pool or a hot tub comes with an increased risk of injury or drowning.
There could also be legal costs involved if someone else gets hurt on your property. Therefore, try to mitigate any chance of injury by installing the proper safety measures such as a fence.
Home Insurance Coverage in Ontario: Final Thoughts
Since there are several factors that affect home insurance costs in Canada, it is always a good idea to stay informed and updated. Our professionals at James Campbell Insurance can help you understand home insurance rates that are particular to your home.
If you are looking to purchase a new house, there are certain things you can keep in mind (as mentioned above) to try and get the best home insurance rates. If you take proper care of your home and give it the regular maintenance it requires, you can be claim-free and then get a discount on your insurance rates.
For more information about home insurance coverage in Ontario or to get a quote, call James Campbell Insurance at 1-833-459-1065 or contact us here.