If you’re searching for a new home or recently purchased one, then home insurance may be the next thing to cross off your list. While shopping around, you may have noticed that home insurance premiums are higher than you may have anticipated.
The fact is there are several reasons why home insurance premiums are on the rise. While some reasons may be out of your control, there are some aspects you can try to control in order to pay lower home insurance premiums.
Here are 5 reasons why home insurance premiums are increasing so high:
1. Rising Inflation
As inflation rises, it indirectly affects home insurance premiums. Since the cost of hiring home service businesses to repair and maintain your home goes up, so will premiums. Over the years the cost of hiring plumbers, contractors, electricians, and other services, have increased. Therefore, home insurance companies need to compensate for any additional costs they may incur if they were to pay out a claim. As a result, they factor rising inflation into premiums.
2. Bigger, Better Homes
Another factor that affects increasing home insurance premiums is the size of your home. The larger the home, the more it will cost to repair if it is damaged. This is because material and labor costs will be amplified.
Homes these days are built with better materials and finishes. Whether it’s hardwood floors, granite countertops, crown molding, or even a finished basement – insurance companies consider these finishes more costly to repair. This consideration ultimately affects home insurance premiums to compensate for higher costs that they could incur if you file a claim.
If you decide to remodel your home or make any large home improvements which increase the value, be sure to let your home insurance provider know so you’re never underinsured.
3. Where Your Home Is Located
Home insurance companies will use the location of your home to determine the amount of risk there is that your home will be damaged. For instance, if there are increased burglaries or other incidences in your neighbourhood, then you may expect to pay higher home insurance premiums. If you’re a homebuyer on the hunt, factor the cost of your insurance premium into your list of desirable neighbourhoods.
As the world is impacted by climate change, poor weather conditions increase the potential for damage to your home. As a result, premiums for home insurance are increasing. Fires used to be the main reason for claims but now water damage has surpassed this.
The icy Canadian winters can cause some damage to your home, but other extreme weather events such as tornadoes, windstorms and floods can cost home insurance companies significant amounts of money when they need to pay out claims to policyholders.
Even insurance companies need insurance! It’s called reinsurance. So, when catastrophic weather events happen globally, this affects the pool of reinsurance which causes premiums to increase across the industry.
5. Older Homes
If you’ve purchased an older home with antiquated infrastructure, this could cause your home insurance premiums to increase. The age of your home and how it was constructed is important. Older homes tend to have more issues because of the dated materials and finishes used when building them. Sewer backups, rotting wood, and other challenges make home insurance premiums higher for these older character-style homes. The premium increase is the result of costing insurance companies more to replace or repair the home if it is damaged.
Although, keep in mind that some upgrades to an older home can actually help you save on your home insurance premiums since it may reduce the risk of damage.
Find the right insurance broker
There are many home insurance companies to choose from in Ontario. When shopping around for the right plan for your needs, consider companies that are offering you affordability, the right amount of coverage, and excellent customer service.
Ultimately, one of the best ways to find top insurance companies and the best rates, is by working with an insurance broker. Ensure you choose a reliable and professional insurance broker that will work in your best interests.
Our team is highly knowledgeable and experienced in helping you find insurance options that will fit your lifestyle seamlessly. Get in touch and we’ll help you explore the best home insurance solutions for your needs.