Things That Govern the Cost of Home Insurance

The first thing you'll notice about home owners insurance is that no two prices are ever the same. That's why comparison shopping is of prime importance and why you should avoid taking the first quote you are offered unless you KNOW it's a good deal. That rarely happens. You'll be asked a number of questions before being given a quote. Here are some things that could affect the price of your home insurance.

Where You Live Matters

Insurance providers take the location of the home into account when deciding your premium. A home in an area with relatively little crime will be assigned a lower rate than a comparable home in a high crime area. Insurance agents look at the number and types of claims in the area and even delve into police reports.

Past Claims and Home Replacement Cost

If you have less than stellar credit combined with past claims your insurance premium might be higher. You are considered a higher risk. The price of replacing items in the home or the home itself is also part of this equation. A high end home will cost more to insure than a more modest property, no matter the location or credit scores.

Heating and Electric Issues

The insurance agent wants to know the method of heating in your home. If it has an oil heating system the agent will need the age and condition of the oil tank. If in poor shape, these tanks can be an environmental risk. Electric or gas heating systems are not as risky, insurance wise. Wood stoves, though popular in many parts of Canada, are considered a fire risk and will usually garner a higher insurance premium.

On the topic of electricity, your insurance agent will want to know if your electrical system uses breakers or fuses. Breakers carry less risk. They’ll also want to know about the wiring in the home, particularly if it’s an older property with a fuse box. The information should be available on the home inspection report.

Plumbing System and Water Access

Home insurers charge more for a home with older plumbing. Indicators of an older system may be lead or galvanized piping, both of which are prone to cracking and leaking. Homes with updated plumbing using plastic or copper piping enjoy lower premiums.

Home insurers also want to know how close your property is to a fire hydrant. That usually means that homes in rural areas are more expensive to insure. The theory is that the closer you are to a fire hydrant, the sooner a fire in your home will be put out, causing less damage.

The All Important Roof

A roof can either be the protective, crowning glory to a home or a leak prone disaster waiting to happen. Insurance agents will want to see the home inspection report to find out the age and condition of your roof. Rule of thumb is that a roof needs replaced every 10 to 20 years. Expect a higher premium for a roof at or near its expiry date.