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
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.Breakers pose less of a risk than fuses.
If the flow of electricity into your home
is less than 100-amps, it increases the risk of overloading and fire.
Older types of wiring can also raise the
level of risk, particularly if the wiringhas deteriorated.
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:
If you build or plan to build a rental unit
into your home.
If you decide to operate a business from
home.
If you make any other major changes to the
structure or how it is used.
If you have other structures on your
property (a swimming pool, pool house, guest house or storage shed) that are
worth more than 10% of the total insured value of your home.
Finally,
here are a couple of things that normally do not affect the cost of your
property insurance:
The type of appliances (gas or electric)
typically does not affect the cost of your home insurance
The exterior (brick or aluminum siding) is
usually not a factor in calculating premiums, however, it is a factor when
calculating the building replacement cost (i.e., the cost to rebuild with
materials of like kind and quality, if the building were destroyed).
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