Reduce Insurance Premiums

10 Tips for Homeowners

Published on January 9th, 2023

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If a pipe bursts while you sleep, a kitchen fire gets out of control, or a tree crashes through your roof, insurance can help you avoid financial hardship. It is essential for all homeowners. The trick is to ensure you have the coverage you need at reasonable rates.

Policies vary from company to company and salespeople often work on commission, so it pays to understand the key features of insurance and to shop around.

Tips to reduce your premiums:

1. Begin by reviewing your current policy.

TD Insurance recommends that you compare your insurance coverage with the value of your personal property. For example, have you made any significant purchases in the previous year (e.g., expensive artwork, jewelry, a boat)? Has the value of your property decreased? These are reasons to adjust your coverage, which can change your premiums.

2. Ask for a discount.

a. Non-smoker: If all the members of your household are non-smokers, the risk of an accidental fire is reduced.

b. Loyalty: Your insurer may reward you for being a loyal customer of many years.

c. Indoor sprinklers: If your home has sprinklers, the damage from a fire would be minimized.

3. Consider the cost to rebuild.
If you own the land your home sits on (e.g., freehold property), the land remains, even if your home is destroyed by a tornado. You may wish to exclude the value of the land to minimize your premiums.

4. Improve your home’s disaster resistance.

a. Install smoke detectors and carbon monoxide detectors.

b. When possible, buy a home near a fire station and a hydrant. Rates can be particularly steep for a rural property that relies on well water.

c. A backwater value or a sump pump can reduce the damage from floods.

d. If you have an older home, upgrade your heating, plumbing and electrical systems.

5. Improve security.
Install motion-sensor lights in the yard, deadbolts on the doors, and a monitored burglar alarm system. Before buying a new home, research the neighbourhood; living in a high crime area (sometimes referred to as a red zone) will likely result in higher insurance costs.

6. Increase your deductible.
This is an easy way to reduce the amount you pay each month, but it does involve a gamble. Increasing your deductible by perhaps $1,500 to save $20 per month is beneficial if you don’t make a claim for many years; however, it’s possible you will need to make a claim next week.

7. Bundle your insurance.
Some companies offer insurance for auto, roadside assistance, travel, and home. You may find that is it most cost-effective to bundle your insurance products.

8. Compare features.
The Financial Services Commission of Ontario (FSCO) regulates all insurers in the province and recommends to consumers that they compare features such as deductibles, coverage amounts for insured perils (inclusions), uninsured perils (exclusions), reimbursement type (Replacement Cost Value or Actual Cash Value) and available endorsements (add-on coverages).

9. Consider replacement value versus actual value.
FSCO defines Replacement Cost Value (RCV) as the amount you would pay to replace an item at today’s current value. Actual Cash Value (ACV) is calculated by subtracting the depreciation value of an item from the Replacement Cost Value (RCV). FSCO offers this example of ACV: if a new laptop today costs $900, and your damaged laptop was assessed at $300 you would receive $600 to replace the laptop. Premiums will differ between RCV and ACV.

10. Understand the limitations of your insurance.
Depending on the policy, you may not be covered in the event of a natural disaster (forest fire, earthquake, landslide, etc.) unless you ask for it and usually pay extra for it. As well, if you install a pool or set up a home-based business without notifying your insurer and adjusting your coverage, you may not be covered at all.

These tips will help you understand your options so you can select the best insurance coverage for your needs. When buying something you hope to never use, at least it’s nice to pay a reasonable price!

Sources:

Financial Services Commission of Ontario. “Ways to Reduce Your Home Insurance Premium.” Updated September 2018. http://www.fsco.gov.on.ca/en/insurance/brochures/pages/insurance-ways-to-reduce.aspx.

TD Insurance. “Review your policy coverage and limits.” Accessed December 2022. https://www.tdinsurance.com/products-services/home-insurance/tips-advice/saving-tips.