What happens if the cost of your home insurance goes up?

In our May 9th blog, we discussed the reasons behind increases in auto insurance premiums.  This week, we will discuss the reasons for increases in Alberta home insurance premiums.   

There are factors over which a homeowner has control which may help decrease insurance premiums.  However, it needs to be said that, in our rapidly changing environmental and economic climate, some of the main culprits behind these premium increases are beyond anyone’s control. Let’s talk about those culprits, then give some tips for how you can do what’s in your power to decrease your premiums. 

What impacts home insurance rates?

In our changing climate, natural disasters such as wildfires, tornadoes, floods and hail storms appear to be more frequent and more devastating.  With more Canadians relying on their insurance policies to cover these substantial losses, the cost to insurance companies has increased significantly.  Often, in Alberta, the claims that are being paid out are more than the premiums being collected.  While many of us believe that insurance companies are raking in the profits, these recent disasters have actually rendered many insurance companies profitless in Alberta.  While we don’t expect this to elicit a lot of sympathy from consumers, the fact is that if  insurance companies are to remain in business, premiums need to be sufficient to cover overhead, claims paid out and still provide somewhat of a profit to the company.  As a result, companies have had to increase premiums in order to continue operating in our province.  

What steps can you take to lower your home insurance cost?

There are steps which can be taken to help lower your home insurance costs. Some of these may or may not apply, so we encourage you to meet with your insurance broker to discuss options that could save you money.  

1. As a first consideration, you may give permission to the insurer for a CREDIT CHECK. A good credit score can mean lower insurance premiums and more options for how you pay your premium.  
2. As discussed in the May 9th blog, combining or BUNDLING YOUR INSURANCE COVERAGES may result in a multi policy discount.  For example, if you place your home and auto insurance with the same insurer, that should result in reduced premiums.  
3. As with our previous discussion of auto insurance, if you INCREASE YOUR DEDUCTIBLE LIMITS,  you will decrease your annual premium.
4. HOME SECURITY MEASURES may also help to lower premiums.  Premium discounts could be available for having a fire or burglar alarm or a water detection alarm in the event of freezing pipes.  
5. If your roof has been updated or inspected, if you have a new water tank, or have updated your home electrical wiring,  let your insurance broker know. These could result in reduced premiums for you. 

6.Always make sure your broker has current information on your home.  This ensures that your home will be adequately covered  in the case of a loss. For instance, if you have renovated, recently, it is important that your broker is able to provide that information to the insuring company so that the value of your home is current.   While this may not result in a reduced premium for you, it will provide appropriate replacement coverage.  

7.Be wise in determining WHEN TO MAKE A CLAIM.  Not every loss is significant enough to warrant an insurance claim.  Remember that there is a discount for the number of years of claims free insurance.  As it takes several years to earn this discount,  it is important to evaluate whether it is worthwhile to make a claim or whether the value of the claim is not significant enough to warrant losing your claims free discount.

8.In these difficult economic times, you may feel that you are helpless in your efforts to reduce costs but there are ways in which you can impact the cost of your insurance premiums.   In the event of a claim, the insurer will act in good faith to return you to where you were before the peril occurred.   By providing premium discounts and claim incentives, insurers are partnering with you and encouraging you to be proactive in keeping your home and valuables safe and minimizing your premiums.   At the end of the day, the occurrence of an insured peril  is not in the interest of you or your insurer.