How to find affordable home insurance

It isn’t getting any less expensive, either. Between 2011 and 2021, home insurance premiums grew at a pace that exceeded the rate of inflation, according to data from Ratesdotca In Alberta, the cost jumped 140% over that ten-year span, while in Ontario, it grew by 64%. 

Suffice it to say, you’re not the only person interested in keeping your home insurance premiums as low as possible. But don’t forget: Home insurance covers your home and personal possessions from damage or loss, and it protects you from liability if someone is injured on your property. In short, it’s not something you want to skimp on. 

As with other types of insurance, the goal should be striking a balance between saving money and meeting your all your insurance needs—no more, no less. Thankfully, knowing how insurance companies determine premiums can help you identify potential discounts and what additional coverages you should pass on. 

What affects the cost of home insurance? 

When shopping for good, affordable home insurance, there are three types of coverage to choose from: comprehensive, broad and basic.

Comprehensive insurance is the most inclusive of these options, covering sudden and accidental occurrences on buildings and personal property, as well as liability. Simply put, this option covers almost everything—with some exclusions specified in your policy. It is also the most expensive option. 

Broad coverage comes at a lower cost, offering similar coverage to that of a comprehensive policy but with more exclusions. One of the main differences between broad and comprehensive coverage is that the former only covers your home’s contents for the perils specifically stated in your policy. 

Finally, there’s basic home insurance, which covers only perils that are named explicitly in the policy—like fire, wind and theft. As the cheapest home insurance option, a basic policy is intended for home owners who are considered “high-risk” due to things like having a history of unpaid claims, making too many claims or having a home in need of serious repair. There are also limitations on this type of coverage. For instance, you may be protected from a peril like fire, but if your home is vandalized, you won’t be covered.

How home insurance premiums are calculated

For first-time home buyers and long-term owners alike, home insurance premiums are based on a long list of factors, from the age and size of the home to where it’s located. Insurance providers pore over data to come up with a quote based on your unique profile and the level of risk your home represents. 

Here’s a non-exhaustive list of things they consider: 

• The cost to rebuild your home. For example, a three-storey mansion with expensive upgrades will cost more to insure than a modest bungalow. 
• The age of the property, the materials used in construction, and the last time major components of the house, such as the plumbing, wiring and roof, were updated. 
• The risk of fire and the likelihood of extensive fire damage. This is determined by your home’s proximity to fire hydrants and fire halls, the presence of a full-time fire department in your area, etc.
• The risk of flooding and water damage. Insurance providers will look at whether your house is located on a floodplain and consider its elevation and proximity to a large body of water. The area’s infrastructure and ability to retain water during a downpour are also considered. 

How to save on home insurance

To get more affordable home insurance, start by thinking like an insurer. The more measures you take to mitigate the risks to your home, the cheaper your rates will be. “The more you maintain, look after and protect your home, the more you’ll save,” says Sonja Denobrega, vice president of personal insurance underwriting at Aviva Canada. 

Here are some tips to get discounts on your home insurance. Be sure to ask about them when getting quotes: 

Protecting your home. Purchase preventative tools, like home monitoring systems, leak prevention systems and backwater valves—and tell your broker when you have them.

Keeping up with the maintenance. Even if your home is older, updating the roofing, plumbing, heating and wiring will mitigate risk and help you secure lower rates.

Notifying your insurer when your mortgage is paid off. This typically yields a discount. If not, it’s time to compare home insurance quotes to find a provider that will offer one. 

Looking for a group discount. Getting insurance from an association you’re already a part of (think: CAA, employee unions, alumni groups) can yield savings. 

Bundling your insurance plans. Bundling insurance plans, like home and auto, will cut costs considerably. This advice also applies to renters who need tenant’s insurance, says Denobrega. “The best way for renters to save is to bundle their insurance,” she says. “When bundled, the savings on the car insurance side can help fund a large portion of your premium.” 

Being loyal–when it makes sense. Staying with the same provider—and connecting with them annually to renegotiate—can net discounts in the long run. If they keep increasing costs, don’t hesitate to shop around.

Paying an annual lump sum. If it’s feasible, pay your insurance premiums on a yearly basis, instead of monthly. Most providers will offer discounts if you do. 

Asking about seniors discounts: Some home insurance providers will offer discounts for those aged 55 and older. “Seniors can often get a discount for their home insurance based on age,” says Denobrega. She adds that the more significant price drop comes when you move from an owned home to a seniors’ home, because you’re moving to tenant-style coverage, and the contents of your home have likely been greatly reduced.

Doing your homework. The easiest way to get affordable home insurance is simple: Shop around to find the providers that can offer the most competitive rates. There’s only one caveat, notes Denobrega: “Make sure you’re comparing apples to apples, with the same inclusions and endorsements.” See below for a list of common home insurance add-ons. 

Home insurance add-ons to consider

When searching for affordable home insurance, you want to make sure it’s not just economical, but also meets all your needs. First, you’ll need a crystal-clear understanding of exactly what’s covered in your policy. Then you can consider endorsements, additional protection or add-ons that are calculated as part of your premiums. Here are some popular home insurance add-ons: 

Earthquake coverage: Damage from earthquakes is not included in standard home insurance coverage. If you live in the west coast or Quebec, which are considered to be at higher-risk for earthquakes, you may want to purchase this add-on. 

Identity theft: A key consideration in the digital age, when such crimes are commonplace. Identity theft coverage covers the legal and professional fees associated with restoring your identity. You may also have to take time off work to line up for a new passport or get a new social insurance card, and identity theft coverage can cover that lost income. 

Scheduled personal property: For expensive items that exceed the limits in your coverage, like wedding bands, designer bags, antique furniture and musical instruments. (Learn more about what’s required to get additional contents insurance.)

Sewer backup protection: This will cover water damage due to backup from any of the service lines like sewer or water mains. 

Overland water protection: This coverage protects you from overland flooding resulting from rising lakes, melting snow or overflowing pools.

Does home insurance cost more if you work from home?

Generally not, unless what you’re doing has changed the way you use your home. Being at home more for more time each day isn’t necessarily considered riskier, but here’s what is: Being away from your home for longer than 96 hours. If you are away from your home for longer than four days, insurance policies typically state that you need to have someone come in and check on your home—this is especially important during the heating season, when pipes could freeze or your furnace could fail. 

Bottom line

Yes, home insurance adds to the costs of home ownership. And that cost can amount to close to $1,000 per year, if you fall within the Canadian average. However, as with other types of insurance, the out-of-pocket costs can easily be far greater if something happens to your house and you don’t have adequate coverage.

As always, it pays to do your research, know what’s covered in your policy, and understand how insurers assess risk. You’re more likely to find affordable insurance if you shop around, maintain and protect your home against common risks, and know when to opt for (or pass on) additional coverages.

Read more on home insurance: 

• 17 home insurance myths to stop believing now
• How to tell if your home insurance settlement is fair
• How climate change is affecting your home insurance
• How to compare home insurance before you buy