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What affects home insurance rates in Alberta?

If you’ve ever compared your home insurance rates with a neighbour, friend, or family member, you may have been confused over why the rates were so different. There are many factors that affect the cost of home insurance in Alberta, including:

  • Location of your home
  • The frequency of natural disasters and severe weather
  • The replacement cost of your home and belongings
  • The age and type of roof
  • The age and type of electrical, plumbing and heating systems
  • The presence of specific risks
  • Your insurance and claims history
  • Your insurance options

Location of Your Home

Where your home is located is a major factor in Alberta home insurance rates. The location determines the proximity of your home to a fire hydrant and fire station, the crime rate of your area, the claim rate of your area, and if your home is near risks like a river. These risk factors help the insurance company decide how risky your home is to insure and therefore the premium to charge.

Here are some examples:

  • If your home is close to a river, your home insurance rates will likely be higher because it is more likely you’ll be impacted by a flood.
  • The closer you are to a fire station, the faster emergency services can get to your home and reduce the amount of damage a fire can do.
  • If you live in a safe neighbourhood, you may have lower rates than someone who lives in a neighbourhood with a high rate of theft or vandalism.

The Frequency of Natural Disasters and Severe Weather

Unfortunately, Alberta has a lot of severe weather. We can experience hailstorms, tornadoes, flooding, and snowstorms, all of which can cause damage to homes. For example, the 2013 floods and 2016 Fort McMurray wildfires cost an eye-watering $14 billion.  This is a major reason why home insurance rates are higher in Alberta.

Replacement Cost of Your Home and Contents

The amount of money it will take to rebuild your home and replace your belongings is a major factor in the cost of home insurance in Alberta. This is known as replacement cost in insurance lingo. This includes the cost of materials and labour.

It’s important to note that replacement cost is not the market value of your home. The replacement cost can be a very different number than how much your home would sell for.

The Age and Type of Roof

Your roof is a major part of protecting your home. It keeps the elements out – but it can take a beating in Alberta. Home insurance companies care about the type and age of your roof because this helps determine how well your roof is doing its job. A damaged roof (which is more likely the older it is) means that the elements can get in. Damage to the roof is also a common home insurance claim in Alberta.

Certain types of roofs perform better for longer – check out our article on the best types of roofing and siding in Alberta. You will likely need to replace your roof periodically, depending on its age, type and condition. Some insurance companies require roof replacements every 15-20 years. You may be denied coverage or have restricted coverage if this maintenance is not taken care of properly.

A new roof or a particular type of roofing may get you a discount with certain Alberta home insurance companies. If you need to replace your roof, talk to your broker about the type of roofing that is eligible for a discount with your insurer.

The Age and Type of Your Home’s Electrical, Plumbing and Heating Systems

Another major factor for home insurance rates in Alberta is the age and type of your home’s electrical, plumbing and heating systems. This is because these systems are a major source of both fire and water claims. For example, fires are more common with certain types of older electrical systems or methods of heating your home. Since your home is more likely to have a claim with this older electrical or heating system, you will have higher premiums. If you have modern systems with safeguards, you would see lower rates.

The Presence of Certain Risks

Swimming pools, wood-burning fireplaces, and trampolines are three risks that can raise your home insurance rates in Alberta. Talk to your broker to see if there are mitigation measures you can take to lower your rates.

Your Insurance and Claims History

Insurance companies care about your history when it comes to your home insurance rates in Alberta. Consider:

  • Have you had home insurance before?
  • How long have you had consistent insurance coverage?
  • Do you pay your insurance bills on time?
  • If you’ve been cancelled by an insurer before, why?
  • How many claims have you had?
  • What were the claims?

The answers to these types of questions help an insurance company determine how good of a client you have been historically and will likely continue to be.

Your Insurance Options

When you purchase home insurance in Alberta, you make decisions about:

  • Coverage – what you’re protected from
  • Limits – the maximum amount your insurance will pay after a covered claim
  • Deductible – the amount you pay up front when you have a covered claim (your insurance covers the rest, up to the policy limit)

These factors directly impact your home insurance rates in Alberta. The more coverage, the higher the limits, and the lower the deductible, the more expensive your premiums will be. The lower the coverage, the lower the limits, and the higher the deductible, the lower your rates will be. It’s important to strike a good balance between protection and price.

Other Factors Affecting Home Insurance Rates in Alberta

There are many more factors that affect home insurance rates in Alberta like:

  • If you smoke or not
  • Your demographics
  • If you’re retired or not
  • Your credit rating
  • The type of home you have
  • If you have a home-based business
  • Mitigation measures like fire alarms, water alarms, sewer backup valves, or sump pumps
  • … and so much more!

Remember that every insurance company is different and calculates rates in their own way. That’s why it’s important to work with a broker. We can help you get the coverage you need for the best possible price. If you have any questions about home insurance rates in Alberta, give us a call.