Top 5 Home Insurance Questions From Our Reddit AMA

Our insurance expert Sean Graham hit up reddit to answer your home insurance questions. Here are some of the top questions according to reddit points.

How to lower your home insurance rates

CuileannDhu asked:
What are some simple things that I can do to lower my rates without compromising on coverage?

Sean Graham said:
Some simple things would include bundling it with your auto insurance, that usually gets you a 10% discount. Having a good credit score can often give you really good discounts. Installing a monitored fire & burglar alarm can save you 15%. Having no claims for 3 years can often get you a 10% discount. Of course, shopping around can have a big impact. Using an online comparison site like www.Kanetix.ca can save you potentially hundreds of dollars in a few minutes. Other discounts you can get would include being a mature (over 50) homeowner, mortgage free discount, non-smoker discount, new home discount just to name a few.

Why your home insurance quote was so high

FightForGlory asked:
I recently bought a house and the home insurance quote said it was $1300 a year. Why was it so high for a $100,000 home in a non-violent/high crime rate area?

Sean Graham said:
That does sound high. It's important to note that home insurance rates are based on the replacement cost of the home, not the market value. Was your home replacement cost more than $100k? Other factors like older homes or claims history will also have a big impact.

Sean Graham's AMA proof

Sean Graham's AMA proof

The relationship between your age and your rate

_shenanigans__ asked:
What role, specifically, does age play in how prices increase and decrease?

Sean Graham said:
Good question. Claims data in large samples shows time after time that mature homeowners have fewer and less severe claims. Those are the facts. Anecdotally, I can say that there is an element of responsibility or pride in home ownership that probably has an impact. If I'm 50 years old and owned a home for 20 years vs. a 25 year old who just bought their first house I am likely more aware of maintenance issues or risks inherent with the home that might need to be addressed. Eg. having updated electrical panels would reduce the risk of fire. Having a sump pump or sewer back up valve would reduce water damage. If I'm a young homeowner I might be less likely to address these issues or have the funds to pay for them. These are all baked into the pricing of home insurance by giving discounts when people hit certain age bands like 35, 50 etc.

How do insurance companies make money?

Unspecified user asked:
How does permanent life insurance work? If I'm guaranteed to receive the death benefit, how does the insurance company make money?

Sean Graham said:
The short answer is that they invest your premiums. Whether it be government bonds or other investments, insurers are just like banks or other financial institutions in that they make investments with your money. This is all factored into their actuarial tables when they determine your premiums.

When to let your insurer know about home renovations

arvana asked:
I have done fairly extensive renovations on my house; at what point, and how often, do I need to inform my insurance company of changes made?

Sean Graham said:
If you are doing major renovations to your home you must notify your insurer BEFORE doing so. There is added risk for injury to third parties because of sharp things lying around, falling objects, etc. You also want your renos and the increased value of what you've installed to be covered. Insurance companies can add an endorsement to your policy for a "home under renovation". This often costs a little more and may reduce some of your coverage. Generally the renos need to be completed within 6 months or the insurer will cancel your policy. Nobody wants to insure a home that is forever being renovated. However, if you're just doing small renos that add up over time, like installing a new shower, new lighting, new flooring, and it's not a major project then I would at some point notify your insurer that you've done some work and that needs to be added to your coverage by increasing your building amount.

arvana said:
My home is forever being renovated. So I guess I won't be telling my insurance company until it's all done. :p

Sean Graham said:
If you're just doing some incremental renos and it's not a major work site then I agree, just tell your insurer if you've done anything that adds significant value to your home, you'll want it to be covered.

Click here to read the full thread.