How Is Home Insurance Calculated?

 In Home Insurance, Home Insurance for Guelph Homeowners, Home Insurance In Ontario, How home insurance is calculated

Home insurance is essential for keeping your house and your belongings protected, however, few people understand how your home insurance is calculated.

At Jeffery & Spence, we’re pleased to provide you with all the information you need to better understand your home insurance policy.

Here are some of the key considerations that go into determining how your home insurance is calculated:

Age & Size of the Home

One of the first things your insurance provider will consider for your home insurance coverage is the age of your home.  As a building ages, various risks associated with the property will increase, and this can influence your premium.

The size of your home is another important factor that will impact what it would cost to repair, replace, or completely rebuild your home in the event of damage or total loss.

Other factors like the size of the lot, water coverages, your mortgage and whether the inhabitants are smokers will also impact your home insurance costs.

Expert Tip: While your insurance provider may check your credit score as part of the home insurance premium calculation, it is important to note that it will only be a soft credit hit and won’t negatively impact your credit rating.


The location of your home will inform your insurance provider how much risk is associated with your property. Factors include: how densely populated your neighbourhood is, how far your home is from fire hydrants and fire stations, as well as the local crime rates could have an impact on your insurance policy premiums.

Your location will also determine your risk for natural disasters. Hurricanes, hail, tornados and other weather events can cause major damage to your home, so it’s important that you find out what your home insurance covers and whether you’ll need to purchase additional coverages for these risks. While most insurance policies cover wind damage, they might not cover floods or earthquakes.

Contents & Inventories

Your home insurance includes protection for its contents, which will cover the items in your home up to a specific amount. For this reason, it’s important to take an inventory of your belongings and calculate how much contents coverage you might need.

Most home insurance policies offer contents coverage that matches the coverage amount for your home’s structure, but if your personal belongings like furniture, clothing, appliances and electronics exceed that amount, you’ll want to consider increasing your coverage amounts.

Expert Tip:  For higher value items, like jewelry, we recommend getting professional appraisals before purchasing extra coverages, and if you have high-value items in your home, we highly recommend keeping photographs and receipts for proof.

Rebuilding Costs vs. Real Estate Costs

The value of your home and how much it would cost to rebuild is also an important factor in determining your home insurance costs. It is important to note that your insurance provider will consider the cost of rebuilding your home, not its market value.

Shifting Coverages within Your Coverage Amount

When you buy home insurance, your home insurance policy will typically have four separate coverages in differing amounts. For example, in addition to coverage for the home and coverage for its contents, you may have coverage for detached structures and additional living expenses.

If you don’t have a detached structure on your property, you can opt to switch the coverage amount to one of the other coverage categories, as long as you don’t exceed the total coverage amount of your policy.

If you have questions about home insurance policies or would like to request a quote, contact us and one of our knowledgeable team members will be happy to help.

Recent Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Insurance Claim Process: man and insurance agent claim process after car crashInsurance tips for the best rate from Jeffery & Spence in Guelph