Before you Buy: The Factors that Can Drive Up Home Insurance Costs

From a property’s age and location to its electric and plumbing systems, there are many variables that can drive up home insurance costs over time. Here’s what Canadian homebuyers need to know.

By Kristin Doucet | 8 minute read

Home insurance rates have risen by more than 5% this year in Canada, but there are steps that buyers can take to reduce the likelihood of a massive hike. 

Before you make an offer on a home, it’s important to understand which home features can increase your home insurance costs. We spoke with Samantha Schimdt, an underwriting specialist with Surex, a Canadian online insurance broker, about the top factors that increase premiums and the upgrades that can lower them.

What are a home’s most important factors to consider when buying a home that could impact the cost of home insurance? 

Location and home updates! When buying a home in Canada, two of the most important factors that can significantly impact the cost of home insurance are location and the condition or updates to key components of the home, such as the roof and furnace. These factors influence not only your premiums but also the coverage options available to you.

When it comes to location, insurance premiums can vary widely based on geographic risk. Homes in Northeast Calgary, for example, often have higher premiums compared to similar properties in South Calgary, primarily due to severe hailstorms in recent years. The August 5, 2024, hailstorm alone caused over $3 billion in damages, according to the Insurance Bureau of Canada. In response, some insurers have raised premiums to reflect the increased risk, while others have introduced higher minimum deductibles — often around $2,500 — to help manage costs.

Older roofs and furnaces also increase the likelihood of claims, which translates into higher premiums. Updating these components typically means a noticeable reduction in insurance costs because it lowers the risk of loss.

And finally, homes that use solid fuel heating systems, such as wood or pellet-burning appliances, generally incur a surcharge. These systems present additional fire hazards, which insurers account for in their pricing.

What are the biggest mistakes homebuyers make when buying a home that could increase home insurance costs?

One of the biggest mistakes homebuyers make is not requesting a home inspection or overlooking factors on the home inspection report that directly affect insurance costs and eligibility. 

Here are some common examples:     

• Ignoring the age and condition of key components: Many buyers focus on aesthetics and layout but fail to consider the age and type of critical systems. Foundation types, older roofs, furnaces, and plumbing increase the likelihood of claims, which can lead to higher premiums — or even difficulty obtaining coverage. A lot of inspectors now include the age of the roof, furnace, hot water tank, as well as details about the electrical and plumbing material.
• Plumbing: Watch out for Poly-B piping, which is prone to leaks and often flagged or declined by insurers.
• Electrical: Homes with aluminum wiring can also face surcharges or require upgrades before coverage is offered, as they are an increased fire risk. Updating these components after purchase can be costly, so it’s best to factor this in upfront.
• Not considering location risk: Buyers often underestimate how much location impacts insurance. Areas prone to severe weather events, such as hail or flooding, can significantly increase premiums. For example, homes in regions with a history of hailstorms may face higher rates or larger deductibles as previously described. Additionally, properties in areas with elevated crime rates often have higher premiums. Distance to the nearest fire hall and hydrants also matters. Homes in rural areas or those far from fire services typically cost more to insure because of increased fire risk.
• Overlooking heating systems: Choosing a home with solid fuel heating (wood or pellet stoves) without understanding the insurance implications is another common mistake. These systems typically trigger surcharges due to increased fire hazards.
• Failing to ask about previous claims: A property’s claims history can directly impact your insurance options. Homes with prior water damage, sewer backup, or fire claims may face higher premiums or limited coverage. In some cases, insurers may decline coverage altogether if the risk appears unresolved. Buyers should always request a claims history report and review it with their insurer before closing to avoid surprises.

Do you have a story or example of a client who has made one of these mistakes?

I had one client who moved from  South Calgary to Northeast Calgary. They were excited to downsize and have a lower mortgage cost. What they didn’t realize was the difference in premiums in not only their home insurance, but also the increased rates in their auto insurance when moving to a higher-rated neighbourhood. In the end, they didn’t actually save that much money in their monthly expenses by downsizing. Had they purchased in a different quadrant of Calgary or, better yet, outside of the city, they likely would have been able to save more.

In 2025, home insurance rates have risen 5.28% according to the Surex blog. What is contributing to the rising costs? 

There isn’t an exact formula as to what is increasing the premiums of home insurance in 2025, however, what I would classify as two of the most significant are the rising cost of claims and increased rebuild valuations.

Severe weather events, such as hailstorms, floods, and wildfires, have become more frequent and costly across Canada. These events lead to higher claim payouts for insurers, which in turn drives premiums upwards.

The cost to repair or rebuild homes has risen sharply due to inflation in construction materials, labour shortages, tariffs and supply chain challenges. Even a modest increase in rebuild costs significantly affects insurance pricing because coverage limits must reflect the true cost of reconstruction. This ensures homeowners are adequately protected, but it also means premiums rise to match those higher valuations.

Ultimately, these trends reflect the reality that insurers are adjusting to keep pace with rising risks and costs, ensuring homeowners remain properly covered.

What steps can homeowners and homebuyers take to mitigate their risk profile?

Homeowners and homebuyers can take several proactive steps to reduce their risk profile and help manage insurance costs. Update key systems by focusing on replacing or upgrading components that pose a higher risk of loss or damage with safer alternatives. 

For example, when it comes to plumbing, replace Poly-B piping with modern materials like PEX or copper. For electrical, upgrade aluminum or knob and tube wiring to copper for improved safety and reduced fire risk. Also, ensure your roof and furnace are in good condition or updated to newer, more reliable models. These changes significantly reduce the likelihood of claims and often result in lower premiums.

Install risk-reduction features by adding sump pumps, backwater valves, and 24-hour centrally monitored alarm systems.

Maintain fire safety by installing smoke detectors and carbon monoxide alarms, keep fire extinguishers accessible, and regularly change smoke detector batteries. Homes closer to fire halls and hydrants also benefit from better fire protection ratings, which have better-rated premiums than those that are considered semi-protected or unprotected.

Consider weather risks, crime rates, and proximity to fire emergency services. These factors significantly influence premiums.

Before buying, buyers should inquire about the property’s claims history with their Realtor or seller. Prior water damage, sewer backup, or fire claims can lead to higher premiums or limited coverage if issues weren’t properly resolved.

Performing regular maintenance on your home is also important. Clean gutters, service furnaces, inspect roofs, and keep safety devices in working order to prevent losses and demonstrate responsible ownership.

What home improvements can help you lower your insurance premium?

Several home improvements can help lower your insurance premium because they reduce the risk of loss or damage. The most impactful upgrades include: replacing your roof, especially with impact-resistant materials; updating your furnace; installing a 24-hour monitored alarm system that detects burglary, carbon monoxide and even flooding; adding water protection features, like sump pumps; and replacing an aging hot water tank, which reduces the chance of leaks and water damage. Some insurers even offer discounts for installing a tankless water heater, which is considered lower risk.  Additionally, replacing Poly-B plumbing with PEX or copper and upgrading knob and tube or aluminum wiring to copper may result in a more competitive rate or more comprehensive coverage.