Home Insurance: What your Insurance Company may look at when it comes time to insure your home

Before an insurance company can arrive at an appropriate premium for your property, it must first assess the likelihood  that you will submit a claim. For the most part, the lower the risk (such as a well-maintained home with updated wiring and plumbing) the lower the insurance premium.  Policies do vary from company to company (for example some companies will deal with high risk properties while others won’t).  The list below from the Insurance Bureau of Canada, covers some of the major things that your company may ask about.

Wiring: Some wiring (e.g., knob-and-tube, aluminum) can increase the chance of a fire, especially if the wiring has deteriorated or been damaged during renovations. Some insurance companies want a guarantee that a home does not have this wiring, some may give you time to have it removed, while others might request an inspection to ensure its safety.

Galvanized/lead pipes: Galvanized or lead piping usually means that the plumbing is older, and older plumbing is more susceptible to cracks, leaks and other problems. Insurance companies generally prefer homes where the plumbing has been upgraded to copper or plastic.

Electrical service: It is preferable to have breakers instead of fuses, and 100-amp service at a minimum. Fuses and lower electrical service can increase chances of a fire.

Heat source: Oil-heated homes can present a costly environmental hazard, so your insurance representative will ask for many details about the age and condition of your tank. Insurance companies tend to prefer forced-air gas furnaces or electric heat.

Wood stoves: These are a common source of house fires and carbon-monoxide poisoning, particularly if they are not properly installed and maintained. Insurance companies may want to inspect such installations. Consult your insurance representative before buying or renting a home with a wood-burning stove or installing one.

Age of roof: Companies generally prefer it if your roof has been updated within the last 20 years. Some policies will pay only depreciated values, as low as 25%, for damaged roofs near the end of their designated service life.

Other uses of your home: Companies will want to know if you have built or are planning to build a rental apartment into your home, begin operating a business there or make any other significant alterations to the structure or the way it’s used.

Replacement cost: The cost of your home insurance will be largely based on the size and composition of your house – as well as your contents.  The larger the house and the more contents you have, the more it will cost to replace.  In addition to the square footage, insurers will take into account such things as the quality of construction used to build your original house, as that can vary greatly from home to home.

Proximity to water: Insurers are concerned about fire, and will look at how far your home is from a source of water (e.g., fire hydrant, fire station).  If you live in an urban area, this is generally not a problem, If you live in the country and the distance is great, however, this will influence the cost of your home insurance.  The sooner a fire can be put out, the lower the cost of restoring your home.

Where you live: Insurers keep records about such things as the number, type and cost of claims by neighbourhood.  They can tell from past experience what the circumstances are in your neighbourhood, and how likely it is that you will have to make a claim.


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