Can My Home Insurance Price Increase at Renewal?

In recent years, the cost of building materials in Canada, such as lumber, concrete, and steel, has skyrocketed, as have labour costs. Since insurance companies calculate premiums according to how much it costs to repair and replace parts of your home, inflation can directly impact homeowners’ payments. Adjusting these costs keeps insurers financially stable and profitable. 

Canada is home to unpredictable weather events and natural disasters. In the last few years, it has experienced more wildfires and harsh winters than ever before. Severe flooding has become more significant, increasing insurance claims and repair costs. 

For instance, in 2023, Canada experienced $3.1 billion in losses from catastrophic events, prompting insurance providers to significantly increase costs.

Home insurance rates almost always increase upon renewal if you have previously made a claim. Why? Suppose you make a claim because of a burst pipe. This issue might inadvertently imply that your home has underlying plumbing issues and that you might make another claim in the future. 

If you’ve made a claim for something preventable or recurring, insurers will perceive your home as an increased risk and anticipate potential future payouts. 

Overall, insurance is a shared risk system. When you file a claim, insurers must pay for repairs and replacements, affecting the financial pool shared by all policyholders. 

Your home insurance rates can rise upon renewal if you’ve facilitated significant renovations, such as installing a high-end kitchen, building additional rooms, or implementing smart features. Expensive materials and furnishings increase your home value, subsequently increasing rates. 

Swimming pools and hot tubs can also significantly impact your home insurance rates for the same reason – they’re value-adding and potentially increase liability risks. The same goes for installations like wood-burning stoves and fireplaces.

Another consideration for increased rates is running a home-based business. Operating a business out of your home can introduce additional risks, such as foot traffic, specialized equipment, and frequent deliveries, requiring additional coverage.

Making your home more disaster-resistant will decrease your chances of filing a claim. Simple fixes like adding storm shutters to your windows or installing more robust roofing materials can help your home withstand inclement weather better.

Maintaining a strong credit history tells insurance providers you can pay your premiums predictably and reliably. Keep your credit record healthy by paying your bills on time and correcting any errors you might notice.

While damage to your home may be inevitable at some point, refraining from making small claims can keep your premiums low upon renewal. If your home sustains minor damage, consider paying for repairs and replacements out of pocket instead.

Living in a crime-prone area can significantly increase your home insurance rates regardless of how well-maintained your home is. However, installing a reliable security system can convince insurers to give you a discount on premiums. Consider adding a smoke detector, burglar alarm, and deadbolt locks.

Some insurance providers reward customers for being long-term policyholders with discounts and unchanged rates. Depending on how long you’ve been with your provider, these discounts can grow the longer you remain with them. 

A good home insurance policy should cover major purchases and additions to your home, but you don’t want to spend on coverage you don’t need. If your high-value items are no longer worth what they once were, you may consider cancelling floaters and add-ons that waste your money. Getting a home appraisal by a professional can tell you what you need to know.