Home insurance is a necessity that homeowners can’t do without.  If you have a mortgage, your lender requires you to have comprehensive home insurance.  Even if you are only renting a house or apartment, it is still advisable to have renters’ insurance for your personal property.

For homeowners, it has become increasingly important to look for the best home insurance rates.  Premiums have risen significantly over the years and they continue to rise year by year.

But don’t lose heart.  There are ways to save on home insurance. With patience and determination, you can get better deals on home insurance without sacrificing your level of coverage.


Don’t Pay More that you Have To

Before we start with tips on how to save on home insurance, it is critical to emphasize that the goal is not to get the cheapest coverage. Remember, cheapest would mean you may not be covered for the risks your home is exposed to and that could cause financial hardship in the future.

The goal is to find adequate coverage at the lowest possible price so you don’t pay more than you have to.


Shop Around for Better Home Insurance Rates

Home insurance companies have been hit hard in the last few years with rising home insurance claims due to weather-related damage.  This trend has contributed dramatically to rising premiums.

A good way for consumers to fight rising premiums is to shop around for a better quote. By comparing home insurance prices for the same type of coverage or better, you can make sure you get the best insurance rate.

If you need to renew your current home insurance, don’t do so without reviewing your home insurance and renegotiating with your insurer.


Reasons your Home Insurance Premiums Are Increasing

If you want to save on home insurance, it is important to understand why your home insurance premiums are increasing.  Understanding the reasons will help you control factors that are manageable.

Home insurance rates in Canada rise because of rising building costs, labor costs, and medical expenses.  These things are covered by your insurance policy, hence, the insurers are forced to raise premiums, too.

Many insurance companies have already increased their premiums as well as minimum deductible amounts.

Along with these factors, there are other reasons why insurance premiums go up. One of them is when you have filed a home insurance claim.


How Filing a Claim Hurts your Home Insurance Rate

Many people will argue that it is unfair for insurers to hike up a premium because of a claim. After all, that’s what home insurance is for – protect a homeowner from a loss or damage.

While this is true, you must understand that the insurance policy is designed to protect you from certain risks like unforeseen events.  If damage or loss occurs, you become a higher risk and more expensive for the insurer to cover.

It is not uncommon for home insurance premiums to go up by as much as 15% after filing a single claim, even if it is for a minor damage or loss.  Let’s say you have been paying home insurance premiums for 6 years without filing a claim until your roof gets damaged by a fallen tree.  Even if you only filed for $3,000 after your deductible, expect your insurance premium to go up.


Insurance Premiums Go Up Even if you Never File a Claim

Many people will also argue, “But I have never filed a claim yet my home insurance premiums continue to rise!”

You must think of insurance as a pool of funds set aside to cover risks of a group of individuals.  If some members dip into that pool of funds to pay for damages, the insurer needs to ensure that the funds are replenished to continue to protect the group members.

Over the past few years, home insurance claims have risen all over Canada due to floods, ice storms, and heavy rainfall.  Higher costs for repairs and rebuilding have increased the stakes for insurers, necessitating higher home insurance premiums.

In short, more homes are getting damaged and costs for rebuilding homes have skyrocketed.


Other Factors that Cause Increases in Premiums

There are also other factors that cause insurance premiums to jump. Homeowners would need to make changes to their coverage over time. For instance, if you have made additions or improvements to your property, your insurer would have to increase the cost of your premium because of higher dwelling coverage.

Further, if you have taken on additional risks such as bought a Pitt Bull to guard your home or installed a trampoline for your kids, they may likely cause an increase in your rate.


How Insurers Calculate your Premium

Knowing the reasons why premiums rise almost yearly, it is also helpful to know how insurers ultimately calculate your home insurance premium.

Rates are based on risks and the likelihood that you will make a claim in the future.  The higher the risk, the higher the premium.  Insurers study various factors to calculate your premium.

These factors include:

  • ✓ Location of your home (occurrence of crime and if it is prone to natural disasters)
  • ✓ Proximity to fire station or hydrant
  • ✓ Amount of coverage and value of your personal property
  • ✓ Your claims history
  • ✓ Credit score
  • ✓ Amount of your deductible

Rates can also vary among provinces in Canada due to government taxes and regulations as they also increase costs and rates.


10 Steps for Homeowners to Reduce Home Insurance Premiums

Home insurance premiums are expensive but you can take steps to save money.

  1. Have a monitored alarm system installed in your home by a reputable alarm company. You can save as much as 20% from your premiums and enjoy higher security for your home and loved ones at the same time.
  2. When renewing home insurance, make sure to compare costs from different insurance providers. As long as you choose an “A” insurance company, you can just use price as the deciding factor as most policies are standard. Don’t renew policies without obtaining a free insurance quote online.
  3. If possible, obtain auto and home insurance from the same provider to avail of discounts. Insurers offer bundled auto and home insurance at lower prices.
  4. Keep your heating, electrical, plumbing systems modern to lower your risks for fire and water damage. This can also help to lower your insurance costs.
  5. Don’t get cover for your home that is in excess of your rebuilding costs in case of damage. You should also exclude the value of your land to lower your premiums.
  6. Go for a higher deductible that you can afford (deductible means the amount you pay out of pocket when you make a claim). Higher deductibles will lower your premiums.
  7. Pay annual premiums rather than monthly fees to get further discounts.
  8. Stop smoking. Smoking is a common cause of home fires and it makes you a higher risk.
  9. Talk to your insurer about discounts you may qualify for.
  10. It isn’t the amount of your claim that’s the issue but rather the frequency of your claims. Avoid filing a claim for minor losses or damage and save claims for the big ones.
  11. Maintain your home in good condition. Clear downspouts and eavestroughs, prune trees, check your roof’s condition, and inspect electrical and heating systems regularly. Good maintenance will help you avoid damage and future claims.
  12. Check the accuracy of your credit report annually and maintain good credit standing.

These 12 steps are simple and sensible and will go a long way to keeping your home insurance rates as low as possible.


Why Should I Provide Insurers with my Credit Score?

You are probably wondering why home insurance companies need your credit score.

Pricing of home insurance using credit scores has been practiced by insurers for many years.  Your ability to manage your finances well shows insurers you are responsible and low risk.  This criterion benefits homeowners who pay bills in a timely manner as it allows them to get lower home insurance rates.

Unless you believe your credit score will penalize you with your home insurance, most experts recommend providing insurers with your credit rating.

Learn more about how credit scores affect your home insurance rates.


Obtain A Free Home Insurance Quote tailored to your needs

As mentioned earlier, obtaining a home insurance quote can help you save money on your premiums.

Not all insurance companies offer the same rates. It is a good idea to compare insurers, coverage, and prices before you buy home insurance.

Our partners (insurance brokers and agents) represent more than 20 insurance companies in Canada. One of them will be happy to shop around for you and then provide you with a home insurance quote that suit your needs.

Remember, your goal is not to downgrade your home insurance protection. To save money, you must make sure you get adequate amount of coverage for your dwelling and your personal property without paying more than necessary.

Request for your free home insurance quote with our free quick online request form.

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