How to save on home insurance

Home insurance also covers you should someone get injured on your property and for any accidental damage you may cause to someone else’s property. In short, it’s not something you want to skimp on. However, there are ways to lower your premiums by securing discounts, as well as by investing now to save in the long run. We spoke to Sonja Denobrega, vice president of personal insurance underwriting at Aviva Canada, about the basics of home insurance and striking a balance between saving money and protecting your home.

The basics of home insurance and factors that affect the cost

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. Put simply, this option covers everything—except some exclusions specified in your policy—and is the most expensive option. 

A more affordable home insurance option is broad, offering similar coverage to that of comprehensive but with more restrictions. One of the main restrictions is that your home’s contents are covered only for the perils specifically stated in your policy. 

Basic home insurance is exactly what it sounds like: no-frills coverage. It covers only perils that are named explicitly in the policy—like fire, wind and theft—and is the cheapest option upfront. It’s intended for homeowners who are considered “high-risk” due to things like a history of unpaid claims, too many claims or having a home in need of serious repairs. There are also restrictions associated with 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.

What does home insurance cover?

First and foremost, your home insurance covers perils, which includes fire, lightning, falling objects, theft, vandalism, wind, hail, aircraft and vehicle damage, explosions, electrical currents, riots, smoke (not from the fireplace) and water (with some limitations; see below). This also covers personal property that’s temporarily outside of the home, such as any belongings stored away for the winter or you take with you when you travel or leave the house. (Something stolen from your car, for instance, would be covered by home insurance, not car insurance.)

Your home insurance policy also covers liability. This means that if someone is unintentionally injured or suffers damage to their personal property as a result of a mishap related to you and your family or your property—for example, if a visitor falls off your porch and injures themselves—liability coverage will protect you if they decide to sue. 

Home insurance also covers personal property, which can include electronics, appliances, clothing and more. However, cheap content insurance may not cover it all, and you may need to purchase additional coverage for high-value items like fine art, jewellery and collectibles. 

There are some things home insurance doesn’t cover, however, like normal wear and tear that happens over time—and this can often lead to misunderstandings. If your roof falls apart because it wasn’t maintained, don’t expect your insurance provider to send you a cheque to cover the damage. Generally, home insurance is meant to cover the unexpected, not the preventable.

Home insurance add-ons to think about

When searching for cheap home insurance, you want to make sure it’s not just economical but good too. First, have a crystal-clear understanding of exactly what’s covered in your policy. Then, consider endorsements, meaning additional protection or add-ons. Denobrega suggests asking your broker or agent what they recommend based on your plan and your needs. Here are some popular home insurance add-ons:  

Earthquakes: The west coast and Quebec are considered high-risk zones. (Find out if you live in an area at high risk for earthquakes.)

Identity theft: A key consideration in the digital age, when such crimes are commonplace. You may have to take time off work to line up for a new passport or get a new social insurance card. 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.

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

Overland water: This flood insurance protects you from overland flooding resulting from rising lakes, melting snow or overflowing pools. (Find out more about what flood insurance covers.)

Umbrella insurance: Additional liability coverage worldwide. Think legal fees and settlement if you’re the target of a lawsuit for perils like libel, slander and beyond. 

How much does home insurance cost in Canada?

Annual home insurance rates range from the hundreds to the thousands, depending on the provider, the package, the property type, the location and a number of other factors.  A 2018 study by J.D. Power suggests that, depending on which province you live in, the average annual cost of home insurance can range from $960 (in Quebec) to $1,284 (in Ontario and Atlantic Canada). And the type of property you live in can contribute a lot to that price variance.

How renters, condo owners and seniors can save on home insurance

Renters: If you’re renting, you still need home insurance, but it won’t be as expensive as if you own your home. And it’s not always required by landlords. However: “If you’re dealing with a property management company, tenant insurance will likely be a requirement in order to move in,” says Denobrega. “Though it may not be mandatory for a private rental, it’s recommended.” She says to ask yourself this: If there’s a fire, do I have the financial capacity to replace all my belongings? Renters insurance also pays for you to live elsewhere following a fire. If you don’t have access to your home, where will you live?

Condo owners: There are two main facets of condo coverage, so you may want to budget for both. A condominium corporation insurance plan, paid by all owners at your address through condo fees, covers the building and common property (like the lobby, hallways, roof, and amenities), condo fixtures (plumbing, wall coverings, etc.), furniture and equipment (in, say, the gym) and liability insurance. You’ll also need personal condo insurance for your individual unit, which covers the personal property in the condo itself and the locker, personal liability and contingencies, should the coverage in the condo corporation plan fall short.  

Seniors: 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, so be sure to ask your broker,” recommends Denobrega, adding 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 their home have been greatly reduced.

Bundle your insurance. “The best way for renters to save is to bundle their insurance. When bundled, the savings on the car insurance side can help fund a large portion of your premium.” If you fall into one of the above categories, here are Denobrega’s top tips for how to get even cheaper home insurance. (This is good advice for anyone, actually!)

1. Try group insurance. “You can bring your premium down by finding insurance through a group you’re a part of. Think university alumni groups, your employer, and so on.”
2. Shop around. “Ask different companies for their most competitive rates. But make sure you’re comparing apples to apples, with the same inclusions and endorsements.” 

What affects the cost of home insurance for homeowners

For first-time buyers and long-term owners alike, finding the right insurance coverage at an affordable price depends on a number of factors, from the home details to where you’re located. Providers pore over data to take every unique situation into account, but here are some of the main considerations: 

• The cost to rebuild the home.
• How old the property is, and when the plumbing, wiring and roofing were last updated. 
• The risk of fire and the costs to repair any damage. To determine this, firefighter response times, proximity to fire hydrants and fire halls, whether water trucks are required and if there is a full-time fire department in the area are all considered.
• The risk of flooding and water damage. They consider whether the house is located on a floodplain, proximity to a large body of water, home elevation and the area infrastructure’s capacity to retain water from a downpour.

How homeowners can save on home insurance

To get more affordable home insurance, start by thinking like an insurer. The more measures you take to lower the risk of your home from getting damaged, the cheaper your rates will be. “The more you maintain, look after and protect your home, the more you’ll save,” says Denobrega. When getting home insurance quotes, ask about discounts for doing the following:

Protecting your home. Purchase preventative measure tools, like monitor alarm 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.  

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. However, if they keep increasing costs, don’t hesitate to shop around.

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

Doing your homework. The best way to find cheap home insurance is simple: Shop around for insurer’s most competitive rates to get the best price.  

Is home insurance more expensive if you work from home?

Generally not, unless what you’re doing has changed the way you use your home. Being at home more isn’t 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 key in heating season when pipes could freeze or your furnace could fail. (Find out more about how the pandemic is impacting home insurance rates.)