6 January 2022

So, you’ve started your search for your next home. Whether this is your first purchase or your “forever home,” there are so many aspects to consider when vetting any property. Odds are that at this point you will have done some mental math to estimate what you can afford before heading out on the hunt for the perfect house. Bonus points if you’ve already talked to a mortgage broker to find out what you qualify for! Something that I often see forgotten, however,  is the need for insurance, and the various factors that will affect how much you are going to be paying in premiums. In this article, I hope to lay out the basics of what you may need to consider in your hunt to prevent any sticker shock down the line.

Location: Whether you buy in a rural area or  the city will have an impact on your premiums for several reasons. The longer it takes for the fire department to reach your property and the availability (or lack) of resources such as hydrants will directly lead to an increased price. Infrastructure often necessitates the use of different heat sources (see below) and thus, corresponding increases in premiums.

Electrical & Plumbing: The type of wiring (copper, aluminum, knob and tube) will greatly affect premiums. Aluminum and K&T can both be fire hazards if not maintained and managed properly. Insurance companies would prefer to have wiring updated to copper, where possible.  While insurance companies can insure properties with both aluminum, knob and tube, they will charge more due to the increased fire risk. 

Galvanized and lead piping can crack, Potentially causing health problems. PEX, plastic, PVC, ABS, and Copper are all newer types of plumbing and should be the standard in newer homes. Expect a question from your insurance provider regarding the type of plumbing in your home, so it’s a good idea to take note of it when viewing a prospective home. 

Water Source & Sewage: Beyond which types of pipes you have, a big concern when insuring a home can be whether you are on a septic system, and/or a well. Most often, if you have a septic tank, you will also have a well. However, if your property is located on or near a body of water, your home may use a septic tank for sewage, while drawing its potable water from the water source. Your insurance company will want to know that the water has been tested recently before offering coverage. Not to worry, water testing is free through Public Health. 

Roof Age: Typically a roof is covered in asphalt shingles, although many people are changing to steel roofs now for longevity and structural integrity. A typical asphalt roof will last anywhere from 10-20 years without need for repairs, depending on conditions. A steel roof is usually warranted for around 50+ years. Insurance companies often consider the age of the roof when insuring your home, and will often reduce the value of the replacement as well as the premium, based on its age.  

Heating Method: The heating method used in your home impacts your premium. Besides needing a WETT inspection (speak to your Realtor about this), you will also pay more for premiums based on the increased risk of a fire in your home.  

Natural gas furnaces are amongst the cheapest for insurance. If you are in a rural area, where either propane or oil is used as a fuel source, insurance premiums can increase due to the costly environmental cleanup required in the event of a leak or spill.

Security and Monitored Systems: Do you have, or plan to install a monitored alarm system? Have you considered - tying in your smoke and carbon monoxide alarms to - the same system? It’s the law to have smoke alarms on every level, and carbon monoxide adjacent to all sleeping areas. Why not include this in your monitored security package, and ensure that when something goes wrong, your local fire department can respond immediately and accordingly. This will also help to lower your premium. 

Replacement Cost: How much will it cost to rebuild your home if it is a total loss? Often policies don’t expect you to necessarily rebuild with that money, it is simply used as a reference point.  Your policy is based on a calculation of the replacement cost, and then often doubled to determine the price for your premiums.

Maybe you have made the choice to stay in the city, but will you be in a detached home, or a condo. Nearly every type of home will change the premium attached, with condos typically seeing the lowest insurance costs. On average in Ontario, condos cost $345 per year to insure versus nearly $1250 for detached homes. Since you won’t be paying to replace the entire building when insuring a condo, you pay less in premiums.

Wherever you choose to purchase your next home, you will now be equipped with the right tools to be able to select an insurance plan that is fit for your home.

Matt Davidson

REALTOR®

226.314.1600

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