Will Rising House Prices Mean Higher Insurance?

It's no secret that house prices have risen steadily across the country. But with escalating prices, there's another cost concern for many new homeowners: insurance. It may seem like with a hefty mortgage your home insurance may also come with a corresponding high premium, but in fact, that isn't always the case.

As it turns out, the market value of your home may have little to do with your home insurance cost. Here's what does affect your premium rates and how to keep them at the right level for you to get the coverage you need.

Rise in Housing Prices

Much talk has been made of the high cost of home ownership in Canada's major cities. Indeed, in 2000 it was possible to buy property in Toronto -- condo or detached property alike -- for well under $300,000. By 2017, detached homes had skyrocketed to over $1.1 million, and condos $500,000. While those numbers have modified slightly into 2019, it still costs about $1 million for a detached home in Toronto and between $500,000 and $600,000 for a condo.

Those rising costs are reflected in Canada's national averages. The Canadian Real Estate Association data shows a 1.8 percent year over year increase between May 2018 and May 2019, at $507,837 this year compared to $498,832 last year.

But, even as there's sticker shock for buying a home, the average home insurance premium doesn't vary much when you compare market value. In Ontario the average premium for homes valued $100,000 to $700,000 is $74.50. For those in the $700,000 and $1,500,000 range, it's $117.

Factors that Affect Home Insurance Premiums

So you can't just rely on the market value of your home to figure out how much premiums may cost. There are other ways you can get into the minds of the insurers, however, to figure out how much you might spend on a policy. One is the replacement value of some of the elements in your home.

But even more so are elements that may pose higher risk of damage. Those include basements that might flood, pools that pose hazards to visitors, and wood frames or fireplaces that come with a risk of fire or smoke damage. Of course, if you have greater policy limits or purchase additional coverage, this will also come with a higher premium cost.

Your Options to Reduce Home Insurance Rates

If you work with your insurer, you can potentially save money. Upgrades like an alarm system, recent roof replacement, or sump pump can also reduce your rates. If you have been with your insurer for some time and haven't put in a claim, you may be able to get a discount on future premiums. You can also pay less for your insurance if you accept a higher deductible limit.

Research Quotes

The high cost of housing is a tough reality for many Canadians. To get the right insurance for your home, check out the latest quotes on Insurance Hotline. There may be more options than you realize.