Average home insurance cost

Home insurance is a type of coverage intended to help homeowners protect one of their biggest investments. But, like all types of insurance, this peace of mind comes at a cost. If it's your first time buying home insurance, you may have some questions about the average home insurance cost and how to save on your premiums. Luckily, BrokerLink has got you covered on all fronts, so you can live stress-free in your new home.

How much are home insurance premiums in Canada?

The average home insurance cost in Canada ranges from $1000 to $2000 annually, which is an average monthly cost of between $83 and $166. However, many factors affect home insurance premiums. So, depending on where you live, you could be paying way less or more than this average.

For example, Alberta home insurance and Ontario home insurance average out to approximately $1500 a year, while those living in British Columbia pay $1700 on average.

Is home insurance mandatory in Canada?

No law in Canada mandates homeowners to purchase insurance coverage. But, when putting things into perspective, the cost of home insurance throughout the year, compared to how much you invested in your home and personal belongings, is nowhere near the same ballpark. This is homeowners insurance as a safety measure, rather than an added cost. In the event you have a mortgage or secured line of credit on your property, you may be required to maintain home insurance.

How is the average home insurance cost calculated?

As we mentioned, when it comes to calculating home insurance premiums, an insurance provider will consider numerous factors when determining your home insurance costs, based on your risk profile. Common factors affecting your premium include:

Where you live

As we mentioned, where you live plays a huge role in the cost of home insurance. An insurance provider will look at where your home is located, whether a fire hall nearby or a fire hydrant, if there are any wooded areas close to you, natural bodies of water, and more.

The features of your home

Do you have a pool? Hot tub, or other unique features about your home? If so, insurance companies need to take these characteristics into account to ensure you have the right coverage in place in case they are damaged or stolen. Additionally, they'll also take a look at whether you have a burglar alarm in place, fire alarms, and other safety features.

The current condition of your house

The current condition of your property and its current property value are also used as rating factors. For example, if you live in an older home that isn't as well-maintained as a newer property, you may pay more for your home insurance policy.

Your previous claims history

If you've had home insurance before, insurance companies will look at your claims history. The more claims you have, the greater the risk you pose to the insurer. As a result, most insurance companies will increase your premiums to offset this risk.

How much coverage you choose

Lastly, how much home insurance you purchase and the types of policies you choose will influence your final costs. For example, basic coverage with low policy limits and no optional policies will have cheaper rates than if you were to increase your coverage limits and add additional coverage to your plan.

How to save on the cost of home insurance

The cost of home insurance can be daunting for a lot of homeowners. Luckily, you can lower your home insurance costs by following these tips and tricks below:

Bundle auto and home insurance

Bundling auto and home insurance is a great way to get lower premiums. Most insurance companies offer a discount if you have more than one policy with them as a way of saying thank you for remaining a loyal customer.

Compare home insurance quotes

As home insurance is optional in Canada, you have the ability to compare insurance costs from multiple insurance companies before making a decision. Doing so will not only help you find the best home insurance costs available, but it will also help you compare coverage options to ensure you don't have to compromise on the amount of protection you're purchasing.

Increase your deductible amount

The deductible is the amount you pay to your insurance provider when filing a claim, before your provider covers the remaining costs. By increasing your deductible, you're essentially taking on more financial responsibility, should you need to file a claim in the future. As a result, most insurance companies will lower your premiums.

Purchase home insurance upfront

Home insurance providers add administrative fees to those who pay their premiums monthly. To avoid higher premiums that result from these fees, consider paying for your insurance coverage upfront.

Ask about discounts

Don't forget to ask about whether other discounts are available! Most home insurance providers offer discounts for remaining claim-free, having security systems installed, bundling your policies, and more!

Consider your coverage options

Lastly, consider what types of policies and limits you need. Home insurance protects you against numerous hazards. However, a lot of the time, you may not need to purchase certain types of coverage if the hazard won't affect you. Remember, you'll still need adequate coverage for your home, but there's nothing wrong with customizing your home insurance policy to reflect your needs and budget.

Work with an insurance broker

An insurance broker works independently from insurance companies, allowing them to help you shop around, customize your coverage, read your policy, and secure an affordable insurance rate within your budget. The best part of all is that working with brokers is free, so you can access their services without having to pay.

What does home insurance include?

A standard home insurance policy is meant to provide financial protection to policyholders. While the types of policies may vary slightly between companies, here's what you can typically expect from a standard insurance plan:

Personal belongings coverage

Personal property coverage will cover the cost of repairs or replacements to your personal belongings if they are damaged, stolen, or lost as a result of an insured peril. When you purchase coverage, your insurance company will ask you to provide a home inventory of all your items and how much they cost. Based on this total, they will then be able to determine how much coverage you need.

Personal liability insurance

Home insurance also includes liability coverage. Third-party liability coverage protects homeowners from legal liability if someone suffers bodily injuries or property damage while at their home. If a lawsuit is filed against them, their liability protection will kick into place and cover the cost of medical bills, repairs, replacements, funeral costs, and lawyer fees, up to their policy limits.

Additional living expenses

If your home is damaged by a covered claim that renders your property uninhabitable, additional living expenses will cover the cost of accommodations, meals, and other associated expenses during the time you are unable to safely live at your house.

Dwelling insurance

Lastly, dwelling insurance coverage protects the physical structure of your home, including additional structures on your property, from specific perils such as severe weather damage, fires, certain natural disasters, theft, vandalism, and other unexpected events. To determine what hazards your coverage includes, review your home insurance policy for more information.

Optional policies

Beyond standard coverage, homeowners can purchase additional coverage for added protection and peace of mind. Some popular add-ons include:

Overland flood insurance

Overland flood insurance, also known as overland water damage coverage, will cover the cost of repairs and replacements if your home is flooded and damaged by a nearby natural body of water.

Sewer backup coverage

Sewer backup coverage will cover the cost of repairs and replacements your home requires should sewage water flood your home. This policy is especially important if you live in a home with older plumbing systems and a basement.

Identity theft coverage

Identity theft coverage will cover the cost of replacing and recovering documents and personal information that may have been stolen during a break-in at your property. This includes your social security number (SIN), bank account information, birth certificate, driver's licence, and other imperative information.

Is it possible to invalidate your homeowners insurance?

Yes, you can invalidate home insurance. There are many ways that homeowners may not be aware of. Some common reasons why your coverage may be invalidated include:

• Starting a home-based business without notifying your insurance company or purchasing additional policies.
• Lying about your home's value, distinguishing features, or its present state.
• Being deceptive about the worth of your personal belongings.
• Engaging in criminal activity on your property.
• Knowingly damaging your property or inflicting bodily harm to others.
• Failure to inform your insurance of alterations or renovations made to your home.
• Switching the security system connected to your home without informing your provider.
• Failing to take proper care of your property.

What does home insurance coverage not cover?

While home insurance will protect you and your home from numerous perils, there are some exclusions you need to be aware of when purchasing your coverage. For example, your insurance policy will not cover appliances within your home if they are damaged as a result of age or a lack of maintenance. It is your job to maintain these items throughout their lifespan properly.

Pest control is another peril that is not covered by home insurance. Again, this is a home maintenance task that is the responsibility of the homeowner to deal with. Lastly, your home coverage will not cover mould unless the mould occurred as the result of flooding in your home or sewer backup, and you purchased these additional policies before the mould manifested in your home.

Save money on home insurance premiums by maintaining your property year-round

Personal insurance claims under your home insurance can jack up your insurance rates, which is why you should try to prevent home insurance claims from occurring in the future. And that starts with taking proper care of your home throughout the year. Here are a couple of things you can do:

Install a sump pump and backwater valve

To prevent flooding during periods of heavy rainfall and melting snow, consider installing a sump pump and backwater valve in your plumbing system. These devices prevent the backflow of water and sewage from entering your home by sealing off your pipes, ensuring water pumps out and not in.

Clean your gutters

Aim to clean your gutters in the fall and winter to allow water to drain away from your home properly. This can help prevent water damage and cracks in your foundation overall.

Perform maintenance on your HVAC system

To prevent home insurance winter claims, ensure that you have a professional perform maintenance on your heating system before the winter season. Maintaining a warm, comfortable home will help prevent your pipes from freezing and potentially bursting.

Keep your home well-maintained

Generally, homeowners should strive to maintain their entire property throughout the year. Whether it's repairing your appliances, checking your plumbing, or addressing small issues before they become major ones, doing so can help you avoid claims and keep your insurance costs as low as possible.

How BrokerLink can help

At BrokerLink, we help Canadians purchase affordable home insurance. Our home insurance brokers have access to numerous policies from some of Canada's top providers, allowing them to compare home insurance quotes, access discounts, offer home insurance advice and holiday protection tips, and more. Beyond standard home insurance, BrokerLink can also help you acquire the following policies:

• Vacation property insurance
• Condo insurance
• Mobile home insurance
• High-value home insurance

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