Why Home Insurance Rates Increase

Notice that your home insurance rates have increased? That could be for any number of reasons, and within those number of reasons the change could have been due to factors within your control and factors completely out of your control. Insurance isn’t always a simple thing, but it boils down to risk and value. When risk and/or value changes, so do your premiums.

Excalibur Insurance understands if it can be frustrating to see your home insurance rates increase and not understand why. We’ve compiled this blog for your better understanding of why home insurance rates may increase, both due to factors within your control and out of your control.

Pricing Factors You Can Control

When your rates are being calculated by your insurance company, numerous factors will be taken into account. To start, we will go over the factors that are within your control. The pricing factors you can control which may cause your insurance premiums to rise are as follows:

• You’ve made a home insurance claim or numerous claims in the past year. If you’ve made one or more home insurance claims over the last policy period and you notice that your rates have gone up, it’s likely due to the change in your claims history. The more claims you make, the likelier you are to make a claim again in the future.
• You’ve changed the value of your home through renovations or updates. If you finished your basement, installed another bathroom, or otherwise increased the value of your home, you can expect your home insurance premiums to rise, and you will need to purchase more coverage to adequately pay for your home insurance. That being said, this isn’t always true – some home upgrades/modifications can qualify you for a discount.

Pricing Factors You Cannot Control

Some things are out of our hands. Say you’ve noticed an increase in your home insurance premiums, and it doesn’t seem like anything regarding your situation has changed. Excalibur wants to enlighten you on what could have happened behind-the-scenes with regards to your price increase. Note, you’re probably not the only one who has seen a jump in their rates.

• High crime rates in your area put you and your neighbours at higher risk of theft/break-ins. Crime rates are one of the analytics that insurance companies will use in order to predict the likelihood that you may make a claim. The cost of your insurance, consequently, will also go up.
• Extreme weather events occurring across Ontario and the country. As climate change impacts our globe more and more, we see a higher trend of extreme weather and other natural disasters. Due to these damage events, insurance companies are required to spend more in order to help their clients get back to normal and, as such, have had to increase their rates in order to afford to pay off the high number of property claims they receive.
• Labour and restoration services increasing in price. As hourly rates go up for labour workers due to inflation, and you experience a natural disaster that severely damages your home, your insurance company may have to pay more today than it did before. This may increase your home insurance premiums.
• The rising cost of materials for rebuilding/repairs. Due to events such as COVID-19, there may have been interruptions in the supply chain, and high demand for housing materials causes a spike in the cost of things like lumber, steel, etc. This may result in your home being underinsured, and you would have to purchase additional insurance to guarantee that your home was fully insured for its absolute replacement cost.

Off Setting a Premium Increase

Is all lost if your home insurance premiums increase, and it wasn’t in your control? No, absolutely not. You might not be able to completely reverse the premium increase, but there are a number of ways you can reduce your premiums without having to slash coverage or downsize. Here are a few:

• Work with an Excalibur Insurance broker to shop around and help you find the best rates possible for your circumstances.
• Ask about discounts – multiple policies, loyal customers, being part of approved clubs, etc. There may be discounts available through specific companies that you wouldn’t otherwise be aware of unless you referred to your provider/broker directly.
• Invest in security alarms and monitoring systems. Approved security features may reward you with a home insurance discount. Just be sure that the discount you would receive is enough to offset the maintenance and ongoing costs of the security system. A good security system is also helpful to lower your insurance rates for cottage insurance, as cottages aren’t always occupied year-round and may be left vulnerable during off-season.
• Pay off your mortgage. Being mortgage-free can reward you with a significant discount.
• Look after your home. The more claims you make, the higher your insurance premiums will be – so try to do your best to reduce your odds of having to make a claim. For small damages and issues, consider resolving the matter yourself. Check out our blog on how even things like the condition of your roof affects your home insurance.
• Increase your deductible. As this is the amount you will be required to pay out in the event of a claim before your insurance company steps in to cover the remainder, be sure that this is an amount you are willing to pay out-of-pocket.

As you can see, there are numerous ways you can lower your home insurance rates without needing to significantly change your coverage – or even having to downsize.

Excalibur Insurance wants to help you get home insurance that provides you and your family with peace-of-mind. Get a free home insurance quote today and start on better, more affordable coverage right away.