House Upgrades that Can Shrink your Home Insurance Costs

House Upgrades that Can Shrink your Home Insurance Costs

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In Canada, the price of home insurance is rising along with the price of food, gas, and many other necessities. Whether you live in a house or a condo, you have the authority to make alterations to your home. There are some home renovations that can help lower your monthly insurance premiums, while others, like updating your kitchen or adding a pool, can raise the cost of your home insurance premiums.

An outdated roof, plumbing, or electrical system can increase the cost of insurance or even make it more difficult to qualify for a policy, even if your house is just 30 or 40 years old. Home renovation insurance is a great option if you’re looking to lower your home insurance costs. 


Key Highlights

  • There are many different house upgrades you can make that will drastically reduce the cost of your home insurance. 
  • Insurance companies all offer different rates, reductions, and plans so make sure to shop around before you decide to purchase home insurance.
  • If you’re willing to make more extensive renovations, your insurance premiums will be significantly reduced in some cases.

What are Home Insurance Premiums?

Simply put, a home insurance premium is the amount of money you pay as a homeowner in order to keep your home insurance policy active. Insurance premiums can vary in price depending on the type of policy, the type of coverage, the cost of your home, the city you live in, and more. 

It’s always wise to have a home insurance policy on your property because you never know what could happen over the course of a decades-long mortgage. When you apply for a mortgage, your lender could require you to purchase a home insurance policy and add the expense of the premiums to your monthly mortgage payments. 

How are Home Insurance Premiums Determined?

The price of home insurance is determined by a number of criteria that insurance companies take into account. 

They begin by determining the value of your house. Then, based on a variety of variables, they determine the cost of repairing or replacing the structure and its contents, including the location of the home, when your home was built, your history of prior insurance claims, the type of heating system your home has, and how renovated its been among other things. Different insurance providers will have different criteria but overall, you can expect these ones to come up. 

If you’re looking to get a home insurance discount, an easy solution is to upgrade and improve your home. Home improvement insurance can significantly lower the costs depending on the nature of the work. Making your home safer or less prone to damage may be the preferable option if you want to lower your home insurance premiums.

5 Home Upgrades to Help Reduce Insurance Costs

1. Improve home security & safety

Insurance companies have long provided discounts for alarm systems, but not all alarm systems are created equal. Your alarm system must be centrally monitored by an approved company for you to be eligible for this insurance discount for home improvements.

Additionally, kitchen fire extinguishers and hardwired smoke detectors are a must to help reduce those insurance costs. If it’s possible to install one, a sprinkler system can reduce your rate.

2. Repair or install a new roof

Depending on the material and local weather conditions, a roof’s typical lifespan might range from 20 years to 50 years.

But getting a new roof could lower your insurance costs, particularly if the old one is older than 20 years. Older roofs often leak more, raising the possibility of expensive damage to your home. If you upgrade to a metal roof, certain suppliers could give you reduced costs. Ask your insurance company for its particular criteria for roof repairs. 

3. Use updated electrical wiring

Insurance companies are wary about knob-and-tube wiring, which is widespread in older homes, and some refuse to issue insurance or only offer temporary coverage while the wiring is being replaced. 

To guarantee that the electrical wiring is compliant, insurance companies could even demand a home inspection. To prevent overloading the fuses and starting a fire, your electrical service may need to be updated to a 100-amp panel.

4. Use updated plumbing

Leaks and water damage are more likely to occur in older homes with galvanized or lead pipes. By changing to copper or PVC pipes, you may be able to reduce your insurance costs. Check with your insurance company for specific criteria. 

5. Installing a sewer backup valve

One of the worst things that may happen to your home is a sewer overflow, so if you’re making any house improvements, it’s a good idea to put it on your list of things to do. 

Some insurance companies will reward their clients who choose to install a sewer backup valve since they are aware that it is expensive to clean and restore a basement to its prior state. If you make this home improvement, make sure to let your home insurance company know and inquire about a discount.

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Other Methods to Reduce Home Insurance Premiums

1. Shop around

Contact a registered insurance agent, broker, or firm when looking around for home insurance to determine which policy is best for you. Make sure that you only contact licensed insurance agents or firms when shopping around. In Ontario, for example, the Financial Services Commission must issue licences to all insurance agents and businesses. Make sure that the insurance company is properly licensed to operate in your province of residence.

2. Increase your deductible

The amount you agree to pay toward the total cost of your insurance claim — or that your insurer compels you to pay — is called a “deductible.” After your deductible is paid, your insurance company is only liable for the balance.

Home insurance plans typically include a deductible. But if you raise your deductible, for instance from $500 to $1,000, you might be able to lower your rate. You will have to pay extra in the case of a loss before your insurance coverage kicks in if your deductible is higher, however.

3. Review your coverage annually

Your home’s current worth, state, and any significant upgrades or acquisitions should all be appropriately reflected in your home insurance coverage. Make the appropriate adjustments to your individual coverages once a year to potentially save money. 

FAQ


How can I reduce my insurance premiums?

If you’re looking to get a home insurance discount, an easy solution is to upgrade and improve your home. Home improvement insurance can significantly lower the costs depending on the nature of the work. Making your home safer or less prone to damage may be the preferable option if you want to lower your home insurance premiums.

What is the 80% rule in homeowners insurance?

An insurer will only cover damages to a home if the property owner has bought insurance coverage equal to at least 80% of the home’s replacement cost. Otherwise, the insurer will only cover a portion of the cost of the damages.

What factors affect homeowners insurance premiums?

They begin by determining the value of your house. Then, based on a variety of variables, they determine the cost of repairing or replacing the structure and its contents, including the location of the home, when your home was built, your history of prior insurance claims, the type of heating system your home has, and how renovated its been among other things. Different insurance providers will have different criteria but overall, you can expect these ones to come up. 

Final Thoughts

Ultimately, it’s up to you to decide whether or not to make renovations to your home to reduce your home insurance premiums. It’s always a good option to think about, not only to reduce your premiums but to make sure your home is in tip-top shape.

Upgrades and improvements to your home are a simple way to earn a home insurance discount. Depending on the type of work being done, insurance for home improvements might drastically reduce the expenses. If you want to minimize your house insurance premiums, it can be preferable to make your home safer or less vulnerable to harm.

If you were on the fence about upgrading your home, hopefully, we’ve helped make the decision a little less stressful!


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