It’s never a great moment when your home insurance premium goes up, especially when you feel like nothing has changed from the year before. Often times it’s a pretty standard increase due to inflation or simply due to the age of your home.
But in addition to the basic things, there are plenty of other factors that can affect your rate from year to year.
As insurance companies use these factors in complex algorithms to determine the risk profile of your property, it’s good to be aware of them and avoid unnecessary changes on your end. Some things are fairly obvious if you think about it, but there are some that are less evident.
Here are some of the top factors that could cause your rate to increase.
The Top Reasons For An Increase To Your Home Insurance Premium
Credit Score Hikes
Your credit is one of those things that has an impact on so many aspects of your life, and home insurance is definitely one of them. One of the things that insurers look at when determining risk is consistency. People who are consistent in their lives in terms of money, and employment – among other things – are easier to predict. And that’s a huge part of how insurance companies determine how risky someone is. So, if your credit dropped recently, due to missed payments or perhaps a credit check, then it’s possible that this could result in a higher home insurance premium on a monthly basis.
Additions & Upgrades
Have you recently made an upgrade or added an addition to your home?
Insurance companies look at your house in terms of how much they would need to pay in a worst-case scenario.
In the event that something happens to or inside your house, these improvements could potentially cost more to replace or repair because of the newly increased worth of your property. So, when you make your space larger or improve it, it becomes more valuable, and thus you end up paying a higher home insurance premium to protect your house.
Flooding is one of the biggest, if not the biggest itself, home insurance claim in Canada these days. That means that if you finish your basement, there is a good chance that your home insurance premium will go up, even more so in areas that are known for flooding.
The Contents of Your House
Similarly to property upgrades, when you start to buy and insure expensive items like drones, large televisions or other high-end adult toys, your house will most likely become more expensive to insure. In the event of a theft or other incident, those expensive items would certainly cost more to replace or repair so your insurance provider could charge you more monthly to protect them.
Your Postal Code
Your postal code’s claim history may have more to do with the price of your insurance than you might think.
Even if your home and/or the contents of it have remained the same, it’s still possible that your home insurance premium could go up due to external factors.
Things like the crime rate, and the occurrence of natural disasters, can have an impact on how much you pay monthly. For instance, if you live in an area that has recently suffered an increase in car theft, you might see an increase the following year due to these trends.
Did you just get a furry friend, or maybe a not-so-furry friend?
No matter how much of a member of the family your pet is, your insurer has to look at it objectively. What this means is, depending on the pet, your policy could see an increase for several reasons.
For dogs and cats, the main factors come down to the breed and the size. Even if your pet is an exception, different breeds have different risk-profiles associated with them that will determine the added risk to the property.
Age of Building & Inflation
Sometimes rate increases are simply due to inflation, or to your building getting to a certain age. These types of increases are out of our control as we can’t stop time or prevent the cost of building materials and labour from increasing every year.
However, to avoid the age of your property becoming a problem, get home inspections regularly, and stay on top of the basic maintenance before costly issues occur and you are forced to file a claim.
A little bit of prevention goes a long way!
Finally, things happen that are out of our control, such as natural disasters, flooding, etc. That’s the reason we have insurance in the first place, right?
However, something that’s important to remember when you file an insurance claim is that your insurance company is there to make money. When you file a claim it costs the insurance company to reimburse you for the damages. To compensate this loss your premiums will go up to make sure it’s still a profitable investment for the insurance company.
What this means as a homeowner is that it’s important to consider all options before making claims, especially smaller things that could be taken care of cheaply on your own.
Hopefully, these points can shed some light on your situation and can help you stave off premium increases (or at least prevent them from going up unnecessarily). Keep them in mind when going about your day to day routine and see if you can keep these kinds of changes to a minimum for the sake of lower more consistent payments.
If you have more questions about how lifestyle changes can affect your premium ask your agent. If you don’t have a home insurance agent yet, go out (or go online) and talk to some to get the answers you need. My advice if you are looking for an agent, the most important is to go with whom you feel most comfortable with.
Do any of these reasons surprise you? Are there any reasons you know of that you would add to this list? Share your comments below!