You might have noticed an increase in your home and auto insurance rates lately. If so, you aren’t alone. People across the country are facing higher rates in their new and existing policies. It isn’t simply because the insurance company decided to charge you more. There are factors that contribute to these rate increases. Understanding what causes your insurance to go up will help you make choices that keep your rates down. A little extra knowledge can also help you get the right coverage for your needs.
Factors that Drive Up Home Insurance Premiums
Extreme Weather and Catastrophes
Fires, tornadoes, hailstorms, floods, and other events are becoming more frequent. Events like the tornadoes last year in the Gatineau and Ottawa regions resulted in millions of dollars in claims.
Higher Replacement and Repair Costs
When the costs of repairing and replacing your insured property increase, so do your insurance costs. Inflation affects all the services, labour expenses, and materials required to restore your home to its previous condition. The cost then increases for the insurance company, and for you too.
Eco-Friendly Features
Most Canadians are making more eco-friendly choices when purchasing features for their homes. You can save a lot of money by installing solar panels, insulated windows and doors, and energy-efficient appliances. It’s important to understand that when these items get damaged, they often cost more to repair or replace.
Adding a Fireplace Insert or Wood-Burning Stove
Many homeowners like the look and feel of a fireplace or wood-burning stove. Some people use them to help cut down on their use of electricity. Having any type of open flame in your home is a serious risk. Auxiliary Heating can increase home insurance premiums because your potential for a house fire goes up.
Installing a Swimming Pool
A swimming pool is not only a luxury item for you and your family; it’s also high risk. Anything that increases the risk of someone getting injured like a swimming pool or trampoline will increase your insurance premiums.
Home Renovations and Improvements
Homes are getting bigger, requiring more coverage for the additional materials and the furnishings. When you add more space to your home, it increases the size and value of your home. Renovations that improve the condition of the home’s structure without making it larger can also increase your rates.
How to Save on Home Insurance
Although you can’t control some factors like severe weather and inflation, you can help reduce your premiums by lowering your risks in some other ways.
1. Get a higher deductible – As deductibles go up, premiums go down. Remember, though, that the deductible is the amount you must pay first before the insurance company pays the claim.
2. Think twice before submitting claims – If a claim is low, you might save money by paying it yourself. Sometimes insurance companies reward customers who don’t file any claims for a certain period of time. Also, consider your deductible. If a claim is for $600 and you have a $500 deductible, the insurance company will only pay the remaining $100 once you meet the deductible of $500.
3. Install a security system – This is another way that insurance companies reward customers. Security systems help reduce the risk of damage and theft to your homes.
4. Make the right kind of home improvements – If you have a finished basement, install a sump pump to prevent flooding and sewer backup. Although homes with finished basements usually cost more to insure, a sump pump can help lower your insurance premiums.
Factors that Drive Up Auto Insurance Premiums
Your premium might be climbing higher, even if you haven’t made any previous insurance claims. Other people’s actions might be the reason for increasing auto insurance premiums. Your seemingly minor violations might have a bigger impact than you expect, too.
More Distracted Drivers
Adjusting the radio, talking with passengers, and even putting on makeup are some of the reasons distracted drivers cause a crash. Today, texting and talking on cell phones has caused a huge increase in distracted driving wrecks, injuries, and fatalities. As a result, insurance premiums have been on the rise to compensate for the cost of the claims.
Adding a Driver to Your Policy
Adding a higher risk driver to your policy can increase your premiums, even if they don’t make a claim either. For example, a driver with one or more previous speeding tickets is more likely to speed and cause a wreck. On the other hand, adding an experienced driver with no previous tickets may not have a negative impact on your premiums.
Getting a Speeding Ticket
When you or anyone on your policy gets a speeding ticket, it increases your vehicle’s risk and drives your premiums up. The same is true of distracted driving tickets. Many insurance companies are treating distracted driving tickets as a major violation.
Autonomous Safety Features
The newest vehicles do almost everything for the driver to help make driving safer and more convenient. When these features get damaged, they cost more to repair.
More Expensive Windshields
Windshields of newer vehicles have driver assistance technology built into the windshield. Not only are the windshields more expensive to replace, but mechanics must also recalibrate the vehicle’s computer system, adding to the cost of labour.
At Fault Vs Not at Fault Insurance
Most provinces have adopted a no-fault insurance system, which means a driver’s insurance company handles their claim no matter who caused the accident. That doesn’t mean you can’t be found at fault for the accident or that it won’t impact your car insurance premiums.
The insurance company will determine if you are partially or fully at fault. The accident will go on your driving record and your premiums may increase accordingly.
How to Save on Auto Insurance
Some of the reasons for rising auto insurance premiums are out of your control. Your choice in the type of car you drive is one way to save money. Often, discounts from the insurance company can help you save more.
1. Install an Anti-Theft Device – Some insurance companies offer discounts when you install an alarm system or anti-theft device.
2. Keep a Clean Driving Record – Maintain a clean driving record for a set time and enjoy a conviction-free discount.
3. Get All Your Insurance in One Place – Get a multi-vehicle discount by insuring all your vehicles with the same company. Save even more with a multi-policy discount when you purchase both home and auto insurance from the same insurance company.
4. Stick with the Same Plan – Stay with the same insurance company for a specified number of years and get a renewal discount.
5. Take a Driving Course – New drivers who successfully complete an approved in-car driver’s training course can receive a driver’s training discount.
6. Get Credit for Kids at School – If your kids are away from home attending school, you can get a discount for the time they don’t have access to the insured vehicle.
Every insurance company offers some forms of discount to help offset the rising costs of insurance premiums. Contact us to learn more about getting the right insurance protection for your home and car.