For the last few years, the weather has been tough on Alberta homes. Storms have been more powerful and more destructive than ever recorded in this province. This June’s floods will go down as the worst in southern Alberta’s history, and no one has forgotten last summer’s hail storms with stones measuring up to six centimetres, which caused extreme property damage as well. Unfortunately, this isn’t a new phenomenon. In fact, storm damage across Canada has seen a steady increase since the late 1990s.
Devastating weather in recent years has led to staggering repair costs. Last year there were over fifty severe weather events in Alberta, causing damage totalling almost $500 million. Water and wind damage made up 70 per cent of home insurance claims for 2012, and it appears very likely that amount will increase for 2013. Analysts’ are projecting damages from June’s flooding to be around $5 billion, and that is a preliminary estimate. The actual costs could be much higher.
Are Alberta Home Insurance Rates Rising?
Rates are based on risk. When insurers consider the likelihood of having to pay for the losses of a few, they must factor those costs into the premiums of many policyholders —even homeowners who haven’t needed to file a claim. Obviously, no one likes to see costs go up, but it also shouldn’t be a surprise.
What Does This Mean for Homeowners?
You can’t change the weather, but you can be prepared. There are several steps homeowners can take to minimize risks to their home and property and keep their costs down in the face of rising insurance rates.
- Install alarm systems to protect against theft and fire. Monitored burglar alarm systems can reduce premiums by as much as 5 per cent. If you have an older home without smoke alarms, you might be able to save an additional 10 per cent by having them installed throughout your house.
- Increase your deductible. While low deductibles mean you don’t have to pay as much for smaller claims like repairing a leaky pipe or a broken window, spread out over the long term, the effect on your premium adds up. Raising your deductible might mean absorbing the costs from small-ticket repairs, but it will lower your insurance rates.
- Reduce the risk of storm damage. Create drainage areas outside your home to keep water away from your house. Install backwater valves in basement drains to prevent sewage backups.
- Keep your insurance provider informed about updates you make. Many homeowners upgrade their homes and forget to inform their insurers. Why leave money on the table? When you make improvements, let your broker know, so they can see if you qualify for additional discounts.
Homeowners can also minimize the impact of increases to their Alberta home insurance rates with a broker. When you bought your home, you used a mortgage broker, right? Brokers have access to products from several different companies and are able to offer alternative coverage and pricing. They offer personalized service, so you don’t have to deal with a random person from a large call center when you have a question. And, they work locally, so if you do need to file a claim, they are well qualified to recommend the best companies to make repairs in your area.
The Outlook for Homebuyers
Increasing costs are rarely encouraging, but in spite of this, the Calgary real estate market remains strong. Our area ranks among the most affordable housing markets in the country, and low interest rates make it even more appealing. By working with an Alberta mortgage broker, buyers can save money, and that can help offset the costs of increasing insurance rates.
If you have been renting until now and are frustrated by high rent and the lack of quality rental properties to choose from, now is an excellent time to consider buying a home. In the past many first time buyers have been intimidated by the prospect of buying their first home, but an experienced mortgage broker can take the mystery out of the pre-approval process and guide you through the steps to becoming a homeowner. Even if you haven’t saved enough to make the traditional down payment on a conventional mortgage, your broker has multiple options that make buying, instead of throwing your money away on rent, more feasible.
After more than a decade of highly destructive storms across the country, rising home insurance premiums seem inevitable, but there are ways to save. Sometimes all it takes is a little creativity and the guidance of a professional who knows the market. At Mortgages By Candice, we want to help you realize your dreams of home ownership. We offer personalized service and a variety of mortgage products to choose from. Contact us today to begin making those dreams real.