How to Lower Home Insurance Costs: 16 Factors Used by Insurers to Calculate Your Rates

If you are getting a new home insurance policy, there are many things that could impact and lower home insurance costs. Today’s blog zooms on this topic and explains, in detail, what could be driving up your rates. These drivers apply both to insurance for a condo and insurance for a house or apartment.

[home_insurance_square_widget]To start with, the rebuilding value of your home and the value of its contents are important to consider.

The more expensive your home is to rebuild and the contents are to replace, the higher the premiums.  It is important to know that insurers do not look at the market value of the home, but at estimated rebuild costs – which they base on things such as your square footage and unique home characteristics.

We compiled an overview of 16 factors that impact your home insurance rates. Knowing what drives the costs will allow you to address some of these issues in order to reduce the premiums.

Part I: Home Insurance and Busilding

Factor	Alternative 1: (Higher Rates)	Alternative 2	Alternative 3: (Lower Rates)	Impact on rate
	Knob and tube wiring - Older wiring used prior to 1950 - Most dangerous wiring (no ground wire, old and worn out wires)	Aluminum wiring - Used in the 1960s and 1970s - Can overheat if not connected properly - May require electrical inspection	Cooper wiring - Standard wiring - Widely used today	High
	Galvanized or lead - Installed before 1960s - Steel pipes covered with zinc - Buildup of corrosion with impact e.g. on water pressure and water quality (lead)	Poly-B or Kitec - Installed in 1970s to 1990s - Known design flaw results in leaks and burst pipes	Copper, PEX / PVC / PB or other plastics - Used in modern homes - Withstands high and low temperatures - Resistant to chemicals in plumbing environment	High
	Wood - More likely to suffer from fire - Often used for smaller houses	Masonry - Used prior to 1970 - Built with concrete/cinder blocks or double wall brick	Concrete or brick - Most stable house frames - Always used for high-rise buildings	Medium
	None - Higher risk of accidents or crimes	Alarm system - Some security through potential warning	Security guard - Live monitoring through an on-site guard - Lowest risk through potential pre-warning and mitigation	Low
	Old house, no renovations - High chance of accidents - E.g. roof not replaced in 25 years - Potential pipe burst, leakage, fire, etc.	Old house, some renovations - Premium reduction for repaired house elements e.g. roof, plumbing	New house - Lowest risk of any issues due to construction - Use of the most modern construction standards	High
	Wood stoves - Seen as potential source of fire - Can lead to monoxide poisoning - Requires a thorough inspection	Gas stoves - Should be properly installed - Sometimes may require inspection	No Stoves / Electric stove - No risk of fire originating from stove	High
	Oil-heated - Can cause environmental hazards - Age and condition of a tank can impact premiums as well	Gas fuelled, fixed space heaters - Significant risk - Potential monoxide poisoning	Electric heat or forced-air gas furnace - Widely used and considered safe	High

Part II: Home Insurance and Location

Factor	Alternative 1: (Higher Rates)	Alternative 2	Alternative 3: (Lower Rates)	Impact on rate
	BC, AB, SK and MB - History of earthquakes in British Columbia - History of flooding, windstorms, and hailstorms in some Alberta, Saskatchewan and Manitoba regions	ON and QC - A few severe flooding incidents, wind storms and hail storms in the past in Ontario - History of ice storms in both Ontario and Quebec - Some earthquake history in Quebec	Atlantic provinces - Some history of hurricanes in Atlantic provinces - Little history or earthquakes in Atlantic provinces	High
	Unsecure and dangerous - High crime rate - History of break-ins	Relatively secure - Low crime rate - Occasional break-ins in the past	Very safe and secure - Very low crime rate - Very limited to no history of break-ins	High
	Far from water sources and fire hall - Fire hydrant beyond 300 m and fire hall beyond 8 km - The highest risk of fire-realted damages	Not very close to water sources and fire hall - Fire hydrant within 300 m and fire hall beyond 8 km - Considerable risk of fire-realted damages	Close to water sources and fire hall - Fire hydrant within 300 m and fire hall within 8 km - Water sources are often in direct view	Medium

Part III: You and Your Insurance Needs

Factor	Alternative 1: (Higher Rates)	Alternative 2	Alternative 3: (Lower Rates)	Impact on rate
	House owner - Building and contents - Detached buildings on the lot - Fences, garden and trees - Pool, etc.	Condo owner - Contents - Condo assessments - Unit improvements	Tenant - Only contents	High
	Single, not married - Seen by insurers as the highest risk	Married - Lower risk as seen by insurers	Retirees - Spends most time at home and thus likely to detect any danger	Low
	Policy as-it-is - No additional endorsements/riders - No extra protection purchased	Policy with a single rider - Adding extra protection for one or few areas e.g. sewer backup	Policy with multiple riders and additional coverage - E.g. sewer backup, living expenses - Coverage for jewelry, wine collection, artwork	Medium
	None - No discounts applicable or aware of	Single discount - Use of a single discount only e.g. bundle of home and auto insurance	Numerous discounts - Alumni, job discounts - Bundle discounts - Loyalty and ages discounts	Medium
	Zero-deductible - Highest risk for insurer since the insurer will always pay for everything	Small deductible (e.g. several hundred dollars) - You pay the deductible first in case of a claim - Insurer covers the rest	High deductible (e.g. several thousand dollars) - The lowest risk for insurer - You pay the deductible first - Insurers risk exposure is lower	Medium
	Business with numerous assets - Running business from home including numerous assets - E.g. equipment, hardware, materials	Business with a few / no assets - Running home business without significant assets - E.g. laptop as an only asset	No business run from home - No additional coverage for business assets required	Medium

We compiled these insights for you with the kind support of Daniel Mirkovic from Square One Insurance, an insurance provider focused exclusively on home insurance. We hope this information will help you get lower home insurance rates and better understand the complex aspects of home insurance.