8 Factors Affecting Alberta Home Insurance Rates

Exterior picture of a eco-friendly, minimalist vacation home. The siding is a combination of wood and concrete with a black slate roof and deck cover. There is a patio table set and a gently sloping lawn with trees in the background.

There’s nothing like your home. It’s where you spend a lot of your time. It’s an investment. It’s your place of refuge. In Alberta, your home also shelters us from the outside elements: wind, rain, cold, snow, and everything else our tumultuous weather has to offer. Our homes are also one of our most valuable assets – they can be expensive to repair or replace. It makes sense to protect our homes with insurance.

Alberta home insurance provides financial help in the event of a catastrophe or an unexpected event. Unfortunately, many people don’t understand how this type of insurance works and opt for the cheapest Alberta home insurance rates they can find. This can leave them frustrated when disaster strikes and they may not have the best coverage. Here’s what impacts Alberta home insurance rates and why they fluctuate:

  1. Your insurance and claims history.
  2. Your credit rating.
  3. Your address.
  4. Your home’s age, type of build, and building material.
  5. Your roof’s age and material.
  6. Your home systems’ (plumbing, heating, electricity) age and type.
  7. The replacement cost of your home and belongings.
  8. Your insurance options.

 

1. Your Insurance and Claims History

Alberta home insurance rates are heavily influenced by your insurance and claims history. First of all, how long have you been consistently insured? The longer you have insurance, the better you look to insurance companies. Second, have you always paid your insurance on time or had any issues with insurers? They’ll know if you’ve missed payments or switched around mid-term. This makes you look like a less desirable client and can increase your rates. Third, the number of claims you’ve made has a significant impact on your home insurance premiums. The fewer claims you’ve had, the cheaper your rates. Some insurance companies even offer discounts for remaining claims-free for a certain number of years.

 

2. Your Credit Rating

You can give insurance companies permission to check your credit rating for a discount. This provides proof that you pay your bills on time and will likely pay your insurance. Not all insurance companies offer this perk, but you can ask your broker if this is available to you.

3. Your Address

Your address determines your location, which impacts a number of factors in your Alberta home insurance premiums:

  • The proximity to a fire hydrant and fire station.
  • The frequency and severity of natural disasters such as floods, tornados, wildfires, and hail storms.
  • The crime rate of your neighbourhood.
  • The claim rate of your neighbourhood.
  • The proximity to hazards such as rivers.

The farther you are from fire services, the more likely your home is to be severely damaged by fire. The frequency and severity of natural disasters also impacts your rates as it means you’re more likely to make a claim. Alberta holds several of the most expensive events in history due to flooding, wildfire, and hailstorms. This makes it more expensive to insure a home in Alberta, especially if you live in an area with a high flood, wildfire, or hail risk.

The crime and claim rate of your neighbourhood also impact your home insurance rates in Alberta, as it helps determine how likely you are to make a claim or be a victim of theft. Higher crime areas tend to be more expensive to insure. Your neighbourhood claim rates will depend on a number of factors from income to the age and building types of homes in your area to how often you experience severe weather.

Obviously, if you live near a river, you are more at risk for events like flooding. Some insurance companies may increase your rates or simply not offer certain types of coverage.

4. Your Home’s Age, Type and Building Material

The older your home, the more likely it may have problems due to wear and tear over time. The type of building and what it’s made of can also impact your home insurance rates in Alberta. For example, a wood-build with regular siding will likely be more expensive to insure than its neighbour that’s concrete or stucco since the wood-build is more likely to be severely damaged by fire or hail.

5. The Age and Type of Roof

Your roof is critical to protecting your home from an element. The older it is, the more likely it will fail or be damaged. Generally, it’s recommended to replace your roof every 15 to 30 years, although it depends on the roofing materials you’ve chosen. Repairs may also be required.

Some insurers will raise your premiums or reduce coverage if your roof is over a certain age.

6. Your Home Systems

Your home’s plumbing, electrical, heating and other systems all impact your home insurance rates. Certain types of systems are more likely to cause damage. For example, knob and tube wiring (generally used before the 1940s) has a higher fire risk. Wood-burning stoves also have a higher fire risk and will make your home more expensive to insure.

7. Replacement Cost of Your Home

How much would it cost to rebuild your home? How much would it cost to replace all of your belongings? These costs factor into your home insurance prices in Alberta. This includes the labour and material costs, as well as replacing appliances, furniture, and your other personal belongings. It can also include debris removal and, if you have the coverage, upgrading your home to current bylaws.

Keep in mind that the purchase price and market value are not the same as the replacement cost. Your home’s purchase price could be far lower or higher than the expense to rebuild it.

 

 

 

8. Your Insurance Options

Of course, your Alberta home insurance rates are also influenced by what you choose in regards to protecting your home. This includes your deductible, policy limits, and coverage options.

Your deductible is the amount you’ll pay if you have a covered claim. The lower this amount, the higher your home insurance premiums. For example, if you have a deductible of $500, you’d pay higher home insurance rates than if you choose a deductible of $1500.

Policy limits are the maximum amount that will be paid out in the event of a claim. There are usually multiple policy limits for different aspects of your home insurance and some insurers have an overall limit as well. For example, you could have a $50,000 contents limit to protect your personal belongings, a $400,000 structural limit to rebuild your home, and $6500 additional living expenses limit. If your house burnt down and was covered by your insurance, that means you’d have up to $400,000 to rebuild the structure of your home, $50,000 to replace your belongings, and $6500 to help cover your additional costs of living away from your home while it’s rebuilt.

Finally, you have your coverage options. The more extensive your coverage, the more expensive your home insurance will be. An insurance broker can help explain your coverage options and determine which ones are necessary and fit your budget.