Curtis Killen

­How to permanently lower your home insurance

Spring is in the air, and that means two things: the days are getting longer, and the snow is beginning to melt. Everybody loves the longer days, but not everyone loves the melted snow, as this will cause many headaches to homeowners across the province due to the possibility of potential water backups in their homes. Everyone remembers the floods in the Ste-Genevieve / Pierrefonds area and other parts of Quebec in 2017, and while we can’t prevent a mass flood from happening, we can certainly inform you about how to prevent “micro floods” that can occur in your basement and other parts of your home.

In our last BLOG, we gave pointers on how to pay the lowest price possible when it comes to car insurance quotes in Montreal and in the province of Quebec. In today’s BLOG we are going to do the exact same, but for home insurance. We’re going to dive a little bit further into how you can achieve this goal, as there are more moving parts for home insurance when it comes to paying the least amount possible with regards to your insurance premium.

1 – Home insurance claim vs. paying out of pocket

Think of your policy as a “just in case” protection. If a tree falls onto your roof? Yes, absolutely this would be a valid reason to submit a claim to an insurance company like Intact Assurance. But in the event of a broken window, for example, we would advise against claiming this, and will tell you why in the paragraph below.

Many people think that home insurance policies follow the principle of “money in – money out”, when in fact they do not. Let me elaborate: let’s take the example of Mr. Tremblay, who has been insured with the same company for the last twenty years, and has never submitted a claim. So that’s twenty years where the insurance company has collected money. Let’s say Mr. Tremblay has paid an average of $1,000 / year for his home insurance premium; that’s a total of $20,000 he has paid to the insurance company, while the insurance company has paid out $0 in claims. This year, Mr. Tremblay has a leak in his roof, and the repairs are to cost $1,000. Mr. Tremblay thinks to himself “hey, it’s about time I make a claim, I don’t feel like paying for this out of pocket, and besides, I am a great client and I have never made a claim in my life. I am going to submit the claim to my insurance company in Montreal, my premium shouldn’t go up because they have still profited $20,000 from me for the past twenty years.” Unfortunately, it’s not that simple.

Companies generate your residential building insurance rates from big data; so, in Mr. Tremblay’s case he would now be penalized for this particular claim, because he is “x” times more likely to make a claim in the next “y” amount of years. I am not an actuary and therefore do not have the exact equation of how this insurance rate increase would be calculated, but a claim like this will impact Mr. Tremblay’s profile.

The point we are making: Mr. Tremblay will suffer from an increase of over $1,000 averaged out over the next five years, the amount of time a claim stays on a client’s file. This is another reason why we suggest claiming only for larger accidents, not small issues. It doesn’t make sense to claim for such small amounts.

Another situation to avoid is claims frequency; if you make that small claim for a broken window, and then a few weeks later need to make a much larger claim for the tree that fell on your house, now you have two claims in the same year. From our experience, you can expect at least a 30% increase in your home insurance renewal quote from your present insurer. Feel like shopping because you find the increase too large? Well, most Quebec insurance companies will refuse to quote you all together due to “aggravation of risk”. Insurers are very wary when it comes to clients who have two claims in one year.

2- Install devices / mechanisms that prevent water damage

Why should you place a strong emphasis on prevention? Because insurance companies will reward you for doing so. Water damage represents almost 70% of all home insurance claims in Quebec, and we can’t stress enough how you absolutely want to prevent this from happening to your home; Quebec insurance companies all compete for clients who are diligent home owners. While KBD tries its best to ensure that your home insurance claims process is as smooth as possible, if it can be avoided altogether you will definitely want to take this route. For existing home owners and new home owners, here are four important preventative measures you’ll want to take note of:

a) Back Water Valve – it’s a device that prevents sewage in an overloaded main sewer line from backing up into your basement. This device prevents sewage from coming into your house through your drains. To give you an idea, just the clean up costs are going to cost you about $10,000 if ever sewer water is in your basement.

b) French Drain – this is a trench filled with gravel or rock containing a pipe that redirects surface water and groundwater away from the foundation of your home.

c) Sump Pump –this is a pump used to remove water that has accumulated in a water collecting sump basin, commonly found in the basements of homes. A little pointer – if you live in an area like Saint Lazare, Hudson, Baie D’Urfé and other regions of Quebec, you will absolutely need to have one of these devices installed in your basement. You will also want to have a battery back up for when the power shuts off during storms that take place during the summer. Too many times have our brokers at KBD Insurance spoken with clients who suffered a large water claim because their sump pump had no power. A situation like this can be avoided at a relatively small cost by installing a battery back up.

d) Water Leak Detection Alarm and Automatic Water Shut off system – A system like this is the cream of the crop when it comes to water damage prevention in your home. Just like a smoke alarm lets you know when there is a fire, a water detection alarm system will let you know when there is a water leak, AND will automatically shut off the water in your house to prevent further damage from occurring. We highly recommend this to individuals who own large houses, as these alarms will prevent six figure water claims, and prevent you from having to live away from home while your house is being repaired.

3 – Keep up to date with your home maintenance!

A point we try and get across to our clients, your insurance policy is not a maintenance package; it’s not there to pay for your broken patio or to fix the foundation of your home if it needs repairs. This being said, keep up to date with your home maintenance! Owning a home is a big responsibility and can be a lot of work at times. Keeping up to date with renovations and repairs will not only prevent insurance claims from taking place, but will also add to the value of your home in the situation that you sell it.

4 – Combine your home and car insurance and with the same company

As with any insurance company, combining your home and car policies together will provide you with on average about a 15% discount. At KBD, we place the majority of our home & car insurance clients with Intact Insurance. By insuring both of your policies with this company, not only will they provide you with a discount on your home insurance quote, they will also provide you with other advantages like having only one deductible to pay in the event you need to make a claim for an event that affects both your home and car insurance policies. For example, let’s say your car is broken into and they vandalize your automobile and steal your laptop. If you have your car insurance policy with one company and the home insurance with the other, unfortunately you’d have two deductibles to pay, one to each company.

5 – Increase your deductible to at least $1,000

As with car insurance, the higher your deductible, the lower your insurance rates will be. Insurance companies in Quebec will reward you for taking on the first $1,000 of a claim. We really try and educate our clients on how much of an impact a higher deductible has on the price you pay for your house insurance; if you consider yourself someone who wouldn’t claim for anything under $2,500, then we suggest putting your deductible to this amount!

To conclude, the next time you type in Google “home insurance near me” or “home insurance broker near me”, be sure to place an emphasis on these five points. Not only will it help you to save money, but it will also help add to the resale value of your home.

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