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A look at factors that affect your insurance rate

Several factors are taken into account to calculate your property insurance rate. Some apply only to homeowners, but others are a factor whether you own a home or condo, or rent a place.

• Insurance companies consider these factors to estimate the likelihood that you – or others in similar circumstances – will make a claim, and what that claim will cost.

These are some of the main things that will affect the cost of your property insurance.

Location, location
Fire hydrant/fire station proximity
Amount and types of coverage
Amount of your deductible
Security features
Other factors for homeowners
Replacement cost
Heating
Electricity
Pipes
Wood stove
Roofs
Other considerations

Location, location

• Whether you own or rent, where you live makes a difference.
• Insurance companies track claims by geographic location and use the information to adjust premiums accordingly.
• Based on past experience in your neighbourhood, they can determine how likely it is you will need to make a claim.
• If you live in an area with a high incidence of break-ins or vandalism, for example, your rate will be higher than what you would pay in an area where those things are rare.
   

Fire hydrant/fire station proximity

• Because fire is a major concern, it’s an advantage to live near a fire hydrant or fire station.
• The closer you are, the better the chances of saving your property in the event of fire.
• In urban areas, proximity usually isn’t a problem. But in more remote or rural areas, the distance may be greater, influencing the cost of your insurance.
   

Amount and types of coverage

• The higher the amount of coverage you purchase, the higher your premium will be.
• The type of package you choose – Comprehensive, Standard or Broad – will also affect the cost of your insurance.
• Insurance coverage for a condo owner will cost more than coverage for a tenant.
  • With a condo, your policy may have to cover your liability exposure for shared or common areas of the structure, which adds to the cost of insuring it.
• Optional coverage for specific items like a bicycle, or jewellery, will also mean a higher premium.
   

Amount of your deductible

• A standard deductible might be $500.
• If you choose a higher deductible ($1,000, for example) your insurance company may reduce your premium.
   

Security features

• An alarm system, smoke detectors, carbon monoxide detectors or other security features will generally get you a discount and help reduce your insurance premium.
   

Other factors for homeowners

If you own a home, these are some of the other variables that may affect what it will cost to insure your property.
 

Replacement cost

• One of the biggest factors is the size of your house. The bigger your house and the more you have in it, the more it will cost to replace everything.
• Apart from the square footage, the quality of construction may also be a factor.
   

Heating

• With oil heating, you may have to pay more than you would with a forced-air gas furnace or electric heat.
• The risk of leaks with oil tanks increases the potential for damage to your property as well as the potential for environmental hazards.
• Depending on the age and condition of your oil tank, you may be encouraged to replace it.
   

Electricity

A variety of factors associated with your electrical system can affect the risk of fire and, with it, the cost of insuring your property.

Pipes

• Lead or galvanized pipes are usually found in older plumbing, which increases the risk of cracking, leaking or other damage.
• Copper or plastic pipes are considered less of a risk.
   

Wood stove

• Wood stoves can pose an increased risk of fire.
• Older model wood stoves, especially if they have not been correctly installed or maintained, are a common source of house fires and carbon-monoxide poisoning.
   

Roofs

• Roofs that are older than 20 years increase the potential for leaks and other damage.
• Some insurers will pay only depreciated values for roofs that are near the end of their service life.
   

Other considerations

How you use your home, as well as some structural features, can also affect your insurance cost. Here are a few examples: