Home insurance is necessary to receive a mortgage in Canada. While it can be overwhelming and expensive, there are many ways to save on your home insurance costs.
However, it’s essential to understand why your home insurance premiums are high before we begin.
Factors that Affect Home Insurance Costs
Generally, your insurance costs will be higher if the covered item is expensive to replace or there is a higher probability of making a claim.
This means a high-end art gallery will have higher insurance costs than a local convenience store because the art is more costly to replace.
As a homeowner, the two strategies to lower your home insurance costs are to reduce the probability of making a claim or to reduce the replacement cost the insurance company will need to pay.
With these two strategies in mind, here are ten tips that will help you keep more of your hard-earned money in the bank account where it belongs!
1. Shop Around
Different insurance providers charge different rates. Some companies may offer promotional rates or incentives to win new business.
As a result, it’s excellent to compare rates when looking for a home insurance policy. We recommend receiving quotes from at least five different companies to get an accurate idea of competitive rates.
You can use an online home insurance comparison website to simplify the process and receive quotes in minutes. If you want to make things most straightforward, consider working with an insurance broker to find the best policy for your needs.
2. Increase Your Deductible
As mentioned previously, reducing the replacement cost of your insurance provider will also lower your monthly payments.
The deductible is the amount you will need to pay out-of-pocket when making an insurance claim. It is on top of your monthly home insurance fees. For example, if you make a $10,000 claim and have a $500 deductible, you will only need to pay $500 while your insurance provider pays the $9,500.
If you increase your deductible, the insurance provider will have a lower replacement cost if you make a claim.
For example, if you increase your coverage to $2,000, your insurance company will only need to pay $8,000.
As a result, they will reward you with lower monthly premiums. However, this tactic is not advised for everyone and requires a sufficient emergency fund in the event you’ll need to make a claim with high deductibles.
3. Be Specific in Your Policy
You may be paying for insurance coverage you don’t need. For example, if you don’t need coverage for landscaping or outdoor structures on your property, consider removing that coverage from your policy.
It is essential to review the coverage carefully you will need and remove policies that don’t make sense. The more specific you can be, the more you can save.
4. Bundle Your Policies
If you have more than one policy with the same provider, see if it’s possible to bundle them together and qualify for a multi-policy discount.
For example, some providers – such as RBC Home Insurance – may give you up to 15 percent off home insurance if you are bundling auto or business insurance as well.
5. Ask About Other Discounts
If you have a security system or smoke detectors installed in every room of your house, make sure to ask about any discounts you can qualify for directly from your provider. Many providers have secret deals for these safety features, but only if you ask.
These systems will reduce the probability of needing to make a claim and the replacement cost for your insurance company.
For example, a security system will deter theft of your property, so you’ll be rewarded with lower monthly payments.
Similarly, although a smoke detector may not prevent a fire from happening, it will reduce the amount of property damage.
6. Consider a Tankless Water Heater
If you currently have a conventional water heater, consider replacing it with a tankless model.
This appliance doesn’t store hot water, so there’s no risk of overflow or gas (which may cause the water to ignite). As a result, there is a lower probability of making a claim, and you may receive lower rates.
7. Install Automatic Gas Shutoff Valves
If you have a gas fireplace, stove or furnace in your home, consider installing automatic shutoff valves. This is an added safety feature that will reduce the risk of excessive carbon monoxide being released into your home.
For example, if there’s a problem with your furnace (or some other device), the valve can turn off this source of carbon monoxide before it has a chance to affect your home.
8. Replace your Roof
You may wonder why almost every home insurance calculator asks for the age of your roof.
This is because a new roof can sustain more environmental damage, reducing the probability of needing to make a claim. However, if you are not careful, a new roof could increase your insurance rates.
This happens if you upgrade your roof to more expensive materials that are costly to replace.
For example, replacing your asphalt shingles with a clay roof may increase your insurance costs. Your insurance rates will generally lower if your new roof uses the same or less expensive materials.
However, this tactic is only suggested for people who need a new roof soon anyway because roofs are expensive.
9. Look into Security Cameras
As with a home security system, cameras are an inexpensive way to lower your home insurance costs potentially.
Security cameras reduce the probability of needing to make a claim and sometimes even the replacement costs.
For example, cameras deter criminals from coming onto your property, reducing the likelihood of theft. Additionally, the camera footage may help the police track the thief to get your stolen goods back.
10. Don’t Make Claims Without Proper Documentation
Most importantly, make sure your claims are 100 percent accurate before you file them – if you can’t prove that a covered incident truly caused the damage or that it has been reported within 48 hours of the actual occurrence, then your insurance policy will not pay out! Be diligent in keeping track of all of this information to get what you’re owed the first time.
The Bottom Line
You can do many things to decrease the costs of your home insurance in Canada.
From increasing your deductible to installing safety features, there are plenty of ways to save on your monthly premiums.
Keep these tips in mind the next time you’re shopping for home insurance and see how much money you can save!
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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