Which 10 factors can affect your home insurance rates?

Understanding key factors such as age, continuous coverage, and claim history that influence home insurance rates can help you strike a balance between affordable premiums and protecting your valuable investment.  

In this article, we review 10 factors that can affect your home insurance. We examine how each factor can influence premiums a homeowner could expect to pay for coverage. Our analysis is based on a sample homeowner profile in our LowestRates.ca quoter and adjusts for each variable.

1. Applicant age

You may qualify for lower insurance once you reach a certain age. Getting older usually means you can expect to pay more for life or travel insurance, and other types of coverage. However, that's not necessarily true for home insurance.

According to Fleur Dsouza, LowestRates.ca insurance expert and licensed insurance broker, the logic behind discounted quotes is that older homeowners are less risky to insure than their younger counterparts. 

"Mature and retired homeowners tend to be home more often, meaning a fire, water leak, or break-in is more likely to be caught early and result in a less severe claim," says DSouza. "They also tend to maintain their properties better and lead more stable lifestyles with lower risk, all of which translate to fewer and less severe claims." 

The age at which an applicant qualifies for a 'mature homeowner discount' varies by insurer. "The threshold can start as low as age 45 with some carriers while others set the bar higher," notes DSouza.

Our research finds that older the applicant, greater the discount. For example, once you reach 70 years, you could pay 4.3% less for home insurance than someone in their thirties applying for the same policy.

2. Active policy

Maintaining a claims-free home insurance policy over a period of time can help you get lower quotes. Continuous coverage demonstrates financial stability and signals lower risk to insurers, especially if you haven't filed any claims or missed a payment. In contrast, gaps in coverage can limit your options when shopping for a new policy. 

Under a year of continuous coverage, your eligibility for insurance discounts can be complicated for providers. At the one-year mark, the market opens up. Homeowners with 3- to 5-years of continuous claims free coverage can be eligible for home insurance discounts.

Even if you have no intention of switching insurance providers, an active claims-free policy can still help you save over time. Some insurance providers apply loyalty discounts once you’ve been with them for a certain number of years.

Our test quoter research didn't output conclusive results on continuous coverage since active policy discounts are typically tied to having no claims over the period. 

3. Past claims

Your personal claims history significantly affects home insurance quotes, as insurance companies rely heavily on past claims to predict potential future coverage requirements.

A claims-free history usually receives the most favourable pricing, as it indicates that you're an applicant with lower risk. Exactly when you're eligible for this discount depends on your insurance provider. "A claims-free discount begins after three consecutive years without a claim, with a larger discount available at five consecutive years. Some insurers reward even longer histories at 7 years and more than 9 years with progressively better discounts," says DSouza.

Conversely, filing a claim generally leads to higher quotes in future. Your premiums are likely to increase when damage to your home results from either your own negligence or factors outside of your control—such as severe weather events in Canada. 

Claim frequency can be a factor too. It’s worth weighing the costs and benefits of reporting a loss to your insurer. "A single large unavoidable claim is generally far less damaging to your insurability than multiple smaller claims filed over a short period," says DSouza.

Our research finds that an applicant with one claim over five years can pay about 20–22% more for home insurance, while an applicant with two claims can pay nearly 30% more. While additional claims don’t always translate into costlier quotes, having a claims history alone increases costs of a policy.

Read more: Why your home insurance rate may rise even if you’ve never made a claim

4. Policy cancellations

Policy cancellations can stay on your insurance record for years and spike home insurance rates. Whether you pay more or not depends on why your coverage ended. 

"Cancellations initiated by a policyholder, such as switching insurers or selling the home, carry little to no negative impact on your insurance history in terms of a penalty," states Dsouza. 

Still, it's important to maintain an active policy until you no longer need it. Preferably don’t rush to cancel your existing home insurance. A lengthy gap in coverage resets your insurance history, potentially resulting in higher premiums until you rebuild your continuous insurability track record. 

On the other hand, cancellations prompted by insurance companies have a detrimental impact. Our research shows that one or two cancellations over 10 years can increase insurance quotes by up to about 14% compared to having no lapse in coverage during the same period.

Common reasons for home insurance cancellations include late payments, too many claims filed over a short period, and unsafe property conditions. Depending on the reason, you can expect higher quotes even years later. For example, "A non-payment cancellation (CNP) typically stays on your insurance record for three years," says Dsouza. 

A cancellation can also make you ineligible for coverage in the first place. “Insurer-initiated cancellations, declines, or refusals are treated most severely," explains Dsouza. "Insurers consider an applicant whose policy was cancelled, declined, or refused by a prior insurer entirely ineligible for coverage, regardless of how much time has passed. 

Related: Six reasons your home insurance could be cancelled

5. Deadbolt

Deadbolt locks offer superior home security compared to standard locks, which help to prevent thieves from breaking into your property. As a result, some insurance providers may offer a discount if your exterior doors are fastened with deadbolt locks. 

However, our research finds that deadbolts have little to no impact on home insurance quotes. One possible reason is that insurance companies expect them as a basic safety feature, especially in newer homes. 

While deadbolts generally don’t offer a price break on their own, you may get a cheaper quote when you combine them with other security features, such as alarms, motion sensors, and 24/7 professional monitoring.

6. Burglar alarm

Some insurers reward homeowners with discounts for installing burglar alarms and other security devices. Insurance companies recognize that homes with visible security features are less likely to experience break-ins, reducing claims filed for property damage and theft. 

Discounts on quotes vary and often depend on sophistication of security system(s). Our study shows that a standalone burglar alarm has no direct influence on insurance quotes. One possible reason is that a basic alarm doesn't trigger an emergency response the way a professionally monitored system does. A DIY alarm may only save you a small amount of money compared to a centrally monitored security system. 

7. Fire alarm

Insurance companies will ask whether you have one or more fire alarms installed when you apply for home insurance. Having at least one fire alarm in your home is a no-brainer, not only for peace of mind but also for potentially lower premiums. Fire alarms help reduce risk of fires, which can lead to costly claims. 

A basic, battery-operated smoke detector may earn you a modest discount on your premium or at least keep it low. A professionally monitored system with a ULC listing, however, could net you greater savings.
 
Our research finds the impact of fire alarms on home insurance quotes is negligible. The minimal impact of fire detection devices could be because existing building and fire codes require homes to have basic smoke alarms. Insurance providers won't reward you for a standard safety device you are required to have in your home.

8. Sprinkler system

Sprinkler systems can lessen risk of fire-related claims, hence some insurance companies encourage using these devices in residential homes and offer discounts for properties that have them. A fire alarm can quickly alert you to a blaze. But a sprinkler system goes further by suppressing a fire before it can spread and cause severe damage. 

You may be eligible for a reduced rate if your home has a professionally installed and operational sprinkler system (self-installed systems typically don't qualify). But that's not always the case, as our research indicates no impact on insurance quotes. One possible reason is that sprinklers can cause severe water damage, which is the top cause of property damage in Canada.

9. Fire extinguishers

Fire extinguishers are handy for quickly smothering a fire, so it's worth keeping one in your home. But will it help lower your home insurance bill? Our study concludes there is no impact on home insurance quotes whether you have one or multiple fire extinguishers. If an insurance company offers you a discounted rate, expect savings to be modest.

It's best to think of fire extinguishers as one part of a broader fire prevention system, alongside fire alarms and sprinkler systems. Insurance companies usually consider fire extinguishers collectively with smoke alarms, deadbolt locks, and other security measures when determining safety and security discounts. 

10. Smoker vs. non-smoker

Smoking poses an indoor fire hazard that can lead to severe property damage. According to StatsCan, smoker's material accounted for 64% of residential fire-related deaths in Canada for home fires tracked between 2015–2021.

FireFighting in Canada states that roughly 8% to 9% of residential fires are attributable to smoking materials like cigarettes. 

As a result, some insurance providers may charge higher premiums for households where at least one occupant smokes. Others may not consider smoking as a significant enough risk factor, having no effect on your premiums.
 
As Dsouza explains, "The standard approach among insurers is to provide a non-smoker discount rather than applying a direct surcharge to smokers—the mechanism is a discount withheld rather than a penalty added, though in practice the financial outcome is the same and smokers pay more."

Keep in mind that when insurance companies consider smoking as a risk factor, they may include cannabis and vaping in the same category. 

The bottom line

Whether you're shopping for your first policy, amending terms at your upcoming renewal, or switching insurance providers, it's worth understanding various factors that can influence your premiums. Besides these 10 factors, there are other considerations such as where you live, claims in your area, and rebuild costs, among others, that insurers assess to price your premiums. Every dollar saved counts, so stay informed about your options and potential discounts to pay less without sacrificing coverage your home deserves.