Five key factors that impact your new home’s insurance rate
House hunting? Don’t forget to factor in insurance, a key component of every new homeowner’s budget. When it comes to your insurance rate, the stuff hidden behind the walls can impact your premium. “Insurance companies prefer that things such as wiring, plumbing and heating are all updated, but this doesn’t always equate to a low insurance premium,” says Tricia Watson, property and casualty insurance manager with CAA Manitoba Insurance Brokers. Many factors go into determining an insurance policy rate, but here are five things you can control.
Newer plastic or copper pipes are generally preferred over lead or galvanized options, which are more prone to cracks or leaks. Keep in mind: Certain types of hazardous materials, including poly-butylene, often won’t be insured at all. After you move in, have your plumbing inspected regularly for leaks, rust and cracks to guard against unexpected damage and potentially costly repairs.
While every insurer has its own guidelines for the type and age of wiring, Watson says “more and more are expecting wiring to be less than 30 years old.” Older electrical systems—50-amp service, knob-and-tube and aluminum wiring—have greater potential to overload and catch fire. Talk to your broker as some insurance companies might not provide coverage without upgrades.
The age of the roof may affect your rate. Anything beyond 15 years old is generally considered an “older roof” by some insurance companies. It’s also worth noting in the event of a claim, many insurers won’t pay for the full replacement value of the roof, but rather the depreciated value. If you replace the roof yourself, hold onto receipts for materials and take before-and-after photos.
If your new home is heated by oil or wood-burning heat, which are associated with greater risks of fire, it might mean paying more for insurance (or not receiving coverage at all). After your home inspection, consider planning for an upgrade to a gas, electric or forced-air system. Updated systems are something insurers consider, so it’s important to keep up the maintenance of your heating system.
Home improvements, such as finishing the basement, may cause your insurance rate to rise, as renovations are likely to increase the cost of rebuilding your home. “It’s important to talk to your broker before you start renovations, especially if the renos are going to increase your home’s replacement costs by $10,000 or more,” says Watson. Be sure to save your receipts from the qualified professionals you hired for the job.