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Demystifying Home Rates

31 March 2020


A home is one of the largest financial commitments a person will make, so you’ll want to make sure it is properly protected and that you get the full benefits of your coverage if and when you need it most.

There are many factors that go into determining home insurance rates. However, because every home and every homeowner is unique, so too is every home insurance policy. Some general rating factors include:

The value of property to be covered

The amount of coverage you’ll need depends on how much it would cost to rebuild the home, and of course, the value of the personal belongings inside the home.

It is important to insure your home for what it would cost to rebuild, of the same quality, if it were to be destroyed. This amount is called the “replacement value,” and it differs from the market and municipal tax assessment values of your home.

Creating and maintaining an inventory of your home’s contents (and keeping relevant receipts and appraisals in a safe place) will not only help you determine the amount of property coverage you need to cover all your belongings, but it will also help expedite a claim should you ever experience a loss.

Type of home

Apartments, condominiums, semi-detached, and detached homes are each considered separately because of size and usage. The construction material (brick, cement, etc.) will also be considered.

Home features

Is there a pool or hot tub? How about a finished basement or a wood-burning fireplace? Maybe you’ve installed a complete home security system or back-water valve. These special features can factor into your rates.

Age of home and maintenance

Older homes that haven’t been upgraded to modern standards will be more expensive to insure because they hold greater risks. Electricity, wiring, sources of heat, the condition of the foundation, and the roof are all important considerations.


If you live in an area more prone to exposures like theft or weather-related incidents, your rates could be higher than if you live in an area where these incidents are less frequent.

Use of home

How a homeowner uses their home can affect insurance costs. Do you have a home-based business? Are you renting out a room or an apartment? Both of these factors may require additional coverage.

The owner

The homeowner’s claim history will also factor into rates. Homeowners who have had no claims or fewer claims in the past will typically pay less for insurance than those who have more claims.

Chosen coverages

The type of policy you choose will affect your premiums too. Depending on your needs, you may want to consider a standard policy covering certain perils (like fire), one with more coverage in the event of a loss, or additional coverage for valuable items that exceed standard policy limits.


Emerging market trends, such as the increasing number of severe weather events we are seeing across the country and the rise in costs associated with insurance fraud, can also affect insurance rates.


Ways to save on home insurance

In addition to the tips provided throughout this article, consider other options for savings, including:

Consult an insurance professional: the important thing to remember is that the more accurate you are with your agent when talking about your protection needs and concerns, the more accurate your rate and discounts are – which means you’ll be properly covered in case the unexpected happens.

Bundling coverage: if you are currently insured with two different companies for your home and auto, look into consolidating the policies under one insurance provider as many offer bundle discounts.

Raising deductibles: while a lower deductible will mean you will pay less out-of-pocket at the time of a claim, it usually also translates to higher insurance rates. A higher deductible will require more cash from you at the time of a claim, but will typically help lower insurance rates.

Exploring discounts: many insurers offer discounts on insurance rates for meeting certain criteria, such as if the home has a working monitoring system. If the homeowner is a member or employed with a particular organization, there could be a group discount available.


Blog submitted by Chamber Member Allstate Insurance Company of Canada

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