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HomeHome Insurance ResourcesFactors That Affect the Cost of Home Insurance

Anyone that owns a home knows how important it is to have the proper home insurance. They also know that it can be expensive. But, what they may not be aware of is that different factors determine how much it is going to cost. Below is the list of factors that affect the cost of home insurance in Ontario and Canada.

  1. Past History For Claims
  2. Where The House Is Located
  3. How Close The Residence Is To Fire Hydrants
  4. How Close The Residence Is To Fire Halls
  5. The Type Of Electrical System That Is In The Home
  6. The Plumbing
  7. The Age Of The House
  8. Any Renovations That Have Been Done
  9. What The Home Is Heated With
  10. The Condition Of The Roof
  11. Pets In The Home
  12. The Cost To Replace The House
  13. Any Other Uses For The Other Than Personal Use
  14. Potential Discounts That The Homeowner Is Eligible For
  15. The Type Of Coverage That The Homeowner Wants
  16. Administrative Costs For The Specific Insurance Company
  17. The Type Of Construction
  18. Smokers In The Home
  19. Finished Basement
  20. Pool

Calculating the Home Insurance Premiums


Each of these factors is carefully considered by the home insurance provider. Then the findings are all put together to determine what the costs of the premiums will be for that particular home insurance shopper.

Past History For Claims

Insurance companies will look at previous claims that the homeowner may have made and these can be considered as a risk for the insurance provider. Any potential risk for this industry is going to create an increase in premiums.

Where The House Is Located

Map Location

Companies providing home insurance will rely on statistical data to help them determine the cost of premiums for a homeowner. They will use the postal code of the location of the home as their source for data collecting. Data may show that residences in a specific postal code have higher claims. This can affect the cost of insurance for homeowners who are living in this region.

How Close The Residence Is To Fire Hydrants

Insurance companies are concerned about replacement costs for any damage done to the home. If a fire breaks out faster, it can be extinguished the less damage is done. This means the firefighters must have quick access to a water source. The insurance companies will use calculations for this concerning where the closest fire hydrant is located.

How Close The Residence Is To Fire Halls

Like fire hydrants, the time response for firefighters can make a difference in how fast the fire can be put out. The closer a house is to the fire hall it is assumed that there will be far less response time.

The Type Of Electrical System That Is In The Home

Wire Cables Electric

It is indicated that the number one cause of fires in Canada is faulty wiring. This can be as a result of the type of wiring system, or the workmanship. Some older homes have what has now banned materials for wiring. Insurance companies will specifically want to know about the type of wiring in a home they are going to insure.

The Plumbing

Insurance companies can receive all types of claims and are not restricted to just fire claims. Flood damage can be the cause of insurance companies having to pay out a great deal of money. A common cause of the flooding is faulty or old plumbing. Again, some materials used in plumbing have been banned, and insurance companies want to know if these exist in the home.

The Age Of The Home

The insurance company may view the home as being an additional risk if it is an older home. It may have some of the dangers that exist for plumbing and heating. If the home is a heritage home, it can be expensive to replace.

Any Renovations That Have Been Done

Renovations increase the value of the home. This means that it increases the costs for the insurance company if they have to replace the home. This is going to be factored into the premiums.

What The Home Is Heated With

Many of the different heating systems that are used to heat homes in Canada can cause risk factors for the insurance company. For example, with oil heating, there is a risk of an oil leak from the oil tank. A wood-burning fireplace or stove increases the risk of fire.

The Condition Of The Roof


The roof is a critical component for protecting the assets and structure of the home. Insurance companies are keenly interested in the age of the roof. They may also be interested in the type of roof materials.

If There Are Any Pets In The Home

Insurance companies are worried about liability costs. They may be reluctant to provide insurance if a specific breed of dog resides in the home.

The Cost To Replace The Home

The big factor with insurance companies is how much they will have to pay out to replace a home. It will cost them a lot more to replace a luxury home compared to a small single-dwelling bungalow for example.

Any Other Uses For The Other Other Than Personal Use

Some homeowners are now renting out space in their personal homes. This creates more significant risks for the Insurance Company, and they are going to take this into consideration when setting the premiums.

Potential Discounts That The Homeowner Is Eligible For

While many factors potentially increase the cost of premiums, there are some that will lower it. These can be based on risk factors that are considered that have been eliminated. Some examples of these are;

  • No mortgage on the home
  • Smoke-free home
  • Mature homeowner discount
  • Claims-free
  • New home discount

The Type Of Coverage That The Homeowner Wants

Like most types of insurance, there are choices in the amount of insurance that one wants with home insurance. The more extensive coverage that is being put in place, the higher the premiums will be.

Administrative Costs

How an individual pays their insurance may affect the costs of the coverage. For example, those who pay their premiums monthly increase the administrative costs for the insurance company. This may get factored into the premiums.

The Type Of Construction The Home Is Comprised Of

Some insurance companies may take into consideration the materials that your home is constructed with. For example, a wood frame home may create a higher risk than a brick or concrete construction as it relates to replacement costs.

Additional Structures

Most insurance companies include coverage for outbuildings. Your insurance company is going to want to know how many there are, their use, and their size for premium purposes.

Are There Any Smokers in the Home?

Cigarette Smoke

Smoking creates a higher risk of fire; therefore, the insurance company perceives this as a threat to them having to pay out a claim. Many insurance companies will offer a premium discount for non-smokers.

Is There a Finished Basement?

The risk with the finished basement comes with having to replace it because of damage done by a flood. An unfinished basement subjected to a flood is going to create fewer damage costs.

Is There a Pool?

Part of the insurance coverage will include liability. Having a pool creates a higher risk for claims being made under this section of the insurance coverage.

The Plus One Factor

These are the most common factors that are affecting home insurance in Canada. There could be future ones such as for those homeowners who are going to grow cannabis in their homes, now that this has been made legal.

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