Have you noticed an increase in your home insurance premiums recently? Felt that your coverage was a little too pricey for what it protects. Maybe you’ve had to raise your coverage limits recently per your broker’s recommendation because the replacement cost of your property changed. What’s going on with the state of home insurance in our province, and in the rest of the world?
Check out Home Insurance for British Columbia Residents by Megson Fitzpatrick, or virtually any other location within our beautiful province, there are some things you need to know in advance about how the state of home insurance has changed significantly over recent years. Note that this article was not created to deter you from the purchase of home insurance; rather, we still want to encourage the ideology that home insurance is an optional but necessary purchase. Here’s what’s going on with the state of this essential insurance product in this current day and age.
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Rates have increased by over 100% in the last year.
British Columbia isn’t the only province to have seen a marked increase in average home insurance premiums. In the last ten or so years, since 2011, rates have virtually doubled in numerous provinces, and the highest level of home insurance premiums of all Canadian provinces is BC.
There are a lot of reasons for this increase. The leading culprits for rising home insurance rates can be traced back to higher prices for building materials, the escalation and frequency of extreme weather events (like wildfires, droughts, earthquakes, windstorms, the like), and additional unexpected costs because of supply-chain disruptions.
How do these impact our rates? Well, they’re out of our control, so unfortunately, we don’t have a lot of say in the matter if our rates go up due to these factors. We can do things to combat them – like raising deductibles, trimming down excess coverage, asking about discounts, and bundling options, or even downsizing your home – but we can’t stop the rising rates of insurance that result from global factors. Natural disasters cause insurance companies to raise their rates to afford payout for claims, higher prices for building materials make homes more costly to repair or restore, and supply-chain disruptions choke out the market. All in all, this equates to more money spent on premiums.
Coverage levels are needing to change to reflect increased replacement costs.
As the cost of our homes rises because of the previously mentioned factors, we risk being underinsured. Why is underinsurance so bad? Because if something happens to your property – i.e., like a fire, a storm, a break-in, or even a tree falls onto your property – and you don’t have enough insurance, you could risk a co-insurance payment or simply lack the coverage necessary to fully restore/repair your home. You could find yourself being required to pay numerous costs out-of-pocket.
Co-insurance, to note, is a clause that is sometimes included as a part of property insurance policies and states that the insurance company will reduce a policy premium so long as the insured carries insurance equal to a specific percentage of the true value of your property (this is usually 80% to 90%.) You, the insured/the property owner, must always maintain this specific amount of insurance. It may seem like an easy thing to do once you’ve gotten a professional appraisal and are aware of the overall cost it would take to replace your home as it stands, but the value of your home can change. To void being subject to a monetary penalty if your home insurance coverage falls short of the percentage that is specified in your co-insurance clause, you need to review your coverage often – even annually, if possible. This ensures that you have enough insurance to protect your property – and your investment!
Advancing technology and home insurance.
It’s not all bad news. As technology evolves, so does home insurance. Smart homes are gaining traction in the housing market and they’re incorporating gadgets that make homes safer, like improved monitoring systems, smoke detectors, glass breakage detectors, and so forth. A lot of these homes are also made from eco-friendly materials which, while costlier now (both to buy and to insure), are sure to decline in price as newer homes become more modernized.
The state of home insurance in BC is a strange one, but ideally, with time things will start to equalize as we progress in the way of technology and combat rising rates by working directly with our brokers.