Ways to Reduce Your Home Insurance Premium

There are ways you can reduce your home insurance premium. Consider the following when purchasing or renewing your home insurance policy:


1. Shop around


When shopping around for home insurance, contact a licensed insurance agent, broker and/or company to find out which policy is most suitable for you. In Ontario, all insurance agents and companies need to be licensed by the Financial Services Commission of Ontario (FSCO). Check FSCO’s Agents Licensed in Ontario and Licensed Insurance Companies in Ontario to see if your insurance agent and company are licensed. Check the Registered Insurance Brokers of Ontario’s website [New Window] for a list of licensed brokers. Read Working with a Home Insurance Agent or Broker to learn about what you can expect from a home insurance agent or broker.


When shopping around for home insurance, get and compare quotes from different insurance companies, agents or brokers. When comparing the quotes, see which one is more suitable to your home and your possessions. While the premium is important to consider for affordability, it is also important to compare other features such as the deductibles, coverage amounts for insured perils (inclusions), what are listed as uninsured perils (exclusions), reimbursement type (Replacement Cost Value or Actual Cash Value) and available endorsements (add-on coverages).


Depending on the policy coverage, you may be reimbursed for Replacement Cost Value or Actual Cash Value.


Decide which of these two best suits your needs, and be sure your policy includes it.


Tip: don’t confuse what you paid for the house with the cost of rebuilding it. Be sure to purchase home insurance based on the rebuilding cost of the home, which is usually lower.  


2. Increase your deductible


A "deductible" is the amount that you agree to pay, or your insurer requires you to pay towards the total amount of your insurance claim. Your insurance company is only responsible for paying the remaining amount after your deductible is paid.


Typically, home insurance policies carry a deductible. But you may be able reduce your premium by increasing your deductible, for example, from $500 to $1,000.


Note: Keep in mind that with a higher deductible you'll have to pay more in the event of a loss before your policy coverage starts. For example, if your roof has $3,000 in damage after a lightning storm and you have a $1,000 deductible, you will be responsible for paying the first $1,000 towards fixing the damage before your insurance company pays the remaining $2,000.


3. Consider buying home and automobile insurance coverage from the same company


Some insurance companies will offer premium discounts if you purchase two or more policies from them.


4. Improve  security


You may be able to further reduce your insurance premium by installing a smoke detector, carbon monoxide detector, monitored burglar alarm system or deadbolt locks. Ask your insurance agent or broker for more information.


5. Seek out other discounts


Check with your insurance agent or broker to find out if you qualify for any additional discounts, such as: 


  • Affinity Discount: employment by a particular organization, or membership in certain union, alumni, professional, occupational or non-profit associations, may qualify you for an "affinity" discount.
  • Loyalty Discount: your insurance company may offer you a loyalty discount if you've been with the company for a certain number of years.
  • Retiree Discount: if you are retired and meet certain conditions, you may be entitled to a retiree discount.
  • Non-Smoker Discount: your insurance company may offer you a non-smoker discount if all family members in the house are non-smokers.

6. Don't switch insurance companies midway through the policy


Wait until renewal time to avoid a cancellation penalty.


7. Improve your home to be more disaster resistant


Find out from your insurance company if there are things you can do to protect your home from natural disasters that can help reduce your home insurance premiums. For example, you may be able to save on your premiums if you install a backwater value or a sump pump to protect your home from water damage.


Review your coverage annually


Your home insurance coverage should accurately reflect your home's current value and condition, as well as any major improvements or purchases. Review your specific coverages annually and make the necessary adjustments; it could save you money. For example, if in 2015, you purchased $4,500 in extra insurance coverage for a new professional cross-country racing bike and accessories valued at $5,000 (because your insurance company, like most, limits basic insurance coverage on bicycles and their equipment and accessories to a maximum of $500) you may want to consider cancelling this extra coverage in 2018, when the bike and accessories have depreciated in value to $1,500.


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