In today’s real estate market, Realtors are more than just facilitators of the buying and selling process—they’re also becoming a critical resource for clients who need advice and guidance on the quality and integrity of their biggest purchase. This doesn’t stop with the wants vs. needs wish list but extends to the actual quality of the building, whether or not the house “has good bones” as they say.
We know that Realtors are equipped with knowledge that extends beyond the confines of their job title, and that this makes them invaluable to their clients. At Cassidy & Young, we’re here to assist in that value add by sharing what home insurance companies are looking for when accepting new business.
While homeowners often feel confident in their coverage, a significant number fail to update or review their policies regularly, leaving them vulnerable when they need coverage most. According to a recent industry study, many homeowners carry outdated or insufficient insurance, which can lead to costly out-of-pocket expenses in the event of a claim. This is where you, as a realtor, can play a key role in helping your clients protect their investments and navigate an increasingly complex insurance landscape.
As a realtor, arming yourself with the right knowledge and tools not only helps your clients make informed decisions but also strengthens your professional relationship. Here’s how you can help your clients secure the protection they need and ensure their homes are fully covered.
Why Home Insurance Is Changing: What Realtors Need to Know
Home insurance policies have undergone significant changes in recent years. From increasing claims to shifting risks due to climate change, it’s crucial for both realtors and their clients to stay informed about these developments.
- Increase in Home Claims
Home insurance claims have risen across the industry, particularly in the last decade. Natural disasters, such as flooding, wildfires, and severe storms, have led to an increase in payouts by insurers. According to the Insurance Bureau of Canada, weather-related claims alone have increased by more than 50% over the past 10 years. These rising claims often translate to higher premiums for homeowners, making it essential to regularly review and update home insurance policies to ensure they’re adequate for current risks.
- The Impact of Climate Change
Climate change is a driving force behind many of the changes in home insurance. Severe weather events, including floods, wildfires, and tornadoes, are becoming more frequent and more intense. According to a report by the Canadian Institute for Climate Choices, climate change could increase the frequency and severity of weather-related disasters, which directly affects home insurance rates and coverage options. For homeowners, this means a greater likelihood of needing to file claims—and possibly paying higher premiums. Encouraging your clients to regularly review their coverage is essential in today’s changing climate.
What Insurance Companies Are Looking For
Insurance companies have become more selective about the types of coverage they are willing to offer, which can vary from city-to-city and from home-to-home. To ensure your clients get the best rates and coverage, there are several key factors they should be aware of when purchasing a home:
Updates to Roof, Heating, Electrical, and Plumbing
Insurance companies are paying closer attention to the condition of a home’s major systems, and the specifics of these systems can significantly impact a homeowner’s premiums and coverage options. Let’s break down each of these areas and what insurers are looking for:
- Electrical Systems
When it comes to electrical systems, insurers prefer homes that are equipped with 100% copper wiring and modern electrical panels—specifically, a 100 or 200 AMP service. These systems are considered safer and more reliable, reducing the risk of fire or electrical failure. If a home has mixed wiring (copper and aluminum), this can present a higher risk, and the home will require an ESA inspection (Electrical Safety Authority) before it can be insured. If your clients are considering a property with mixed wiring, they should contact an experienced member of the Cassidy & Young team to discuss the necessary steps for inspection and certification. Insurers will also take into account the overall condition and age of the electrical system, and homes with outdated systems (particularly pre-1980s homes) may be flagged for higher premiums or even be difficult to insure.
- Heating Systems
Heating systems can vary widely from home to home, so it’s crucial to provide accurate details to your insurance broker. Insurers require knowledge about when the heating system was last updated, as well as whether or not it was professionally installed. If there’s a wood stove in the home, it must not only be professionally installed but also be WETT certified (Wood Energy Technology Transfer). Additionally, insurers may ask about how frequently the wood stove is used and how much firewood (in bush cords) is burned annually. For homes with propane tanks, the insurer will want specifics about the material composition of the tank, its location on the property, and other safety details.
With such a wide variety of heating systems available, it’s essential to have these details on hand. If your clients are unsure, encourage them to reach out to Cassidy & Young before closing on the property. We’re happy to provide guidance to ensure it meets insurance requirements.
- Plumbing Systems
The age and material of a home’s plumbing system are crucial factors for insurers. If the property is over 25 years old, it’s especially important to evaluate the type of plumbing materials used, whether it’s Copper, PEX, ABS, or Cast Iron. The condition of these materials also plays a role in how insurable the home will be. Plumbing systems that have deteriorated over time can lead to costly water damage claims, so it’s vital to have a clear understanding of what your clients are dealing with. Let your clients know that they should be prepared to discuss their plumbing system, especially if the home is older or has had previous issues. In some cases, updating the plumbing can lower premiums and increase insurability.
By ensuring that your clients have this knowledge before they close on a property, they can avoid potential delays or surprises in securing adequate home insurance coverage. It’s always best to be proactive and reach out to Cassidy & Young for expert advice on these critical aspects of home ownership!
How to Prevent a Claim
The Claims History of Previous Owners
Insurance companies may also request information about the claim history of a property. This is why it’s important for realtors to help clients research the home’s history, including previous insurance claims and repairs. This transparency can help avoid surprises down the road and ensure that a client’s policy reflects the true risks associated with their new home.
Grading and Drainage Around the Home
Proper grading around a home is crucial for preventing water damage. If the land around the house doesn’t slope away from the foundation, water can pool around the base, leading to leaks, flooding, and costly damage. Insurance companies take these factors into account when determining premiums and coverage. Before recommending a home, advise your clients to inspect the grading around the property and make sure the drainage systems are working correctly.
Fire Hall Protection
One of the key factors insurers consider when assessing risk is the proximity of the home to a fire hydrant and a fire hall. Homes located within 300 meters of a fire hydrant and within 5 kilometers of a fire hall are typically considered lower risk, making it easier for homeowners to find standard, reasonably priced coverage.
However, homes that fall outside these standard distances—such as those in rural or remote areas—are considered higher risk. For these properties, finding suitable insurance coverage can be more difficult, as insurers are more cautious about the potential costs involved in responding to a fire. In these instances, insurance companies want to know if the properties have shuttle tank services, to aid in the event of a fire.
This is where a specialized, knowledgeable broker like Cassidy & Young comes into play. Working with a broker who understands the intricacies of the insurance market and has access to a wide range of policies can make a huge difference in finding the right coverage for homes that don’t meet the standard risk criteria. By partnering with a brokerage, your clients gain access to tailored solutions and expert guidance to ensure they can secure appropriate coverage, no matter where their home is located.
Home Inspections by Insurance Providers
While not all insurers require home inspections, some may ask for one, especially for high-risk properties or those in areas prone to severe weather. An inspection by the insurance provider helps to identify potential hazards and can ensure that the home meets the insurer’s standards and that adequate coverage is being offered. Encourage your clients to ask their broker if an inspection might be required for the home they’re considering. Being prepared for this possibility can prevent delays and surprises when finalizing the insurance policy.
How to Save on Insurance: Discounts and Savings Opportunities
Many homeowners are unaware of the discounts and savings opportunities available to them. These discounts can significantly reduce premiums, especially for clients who take proactive steps to reduce risk. Here’s a breakdown of some common discounts:
- Fire Alarms and Monitored Systems Insurance companies often offer discounts for homes that are equipped with fire alarms or security systems that are monitored by a central station. These systems reduce the risk of extensive damage from fire, theft, or other emergencies, which in turn lowers the insurer’s risk. If your clients are purchasing a home without these systems, recommend that they install them as a precautionary measure. The added protection can also lead to long-term savings.
- Mitigation Devices
Mitigation devices like sump pumps can help prevent significant damage from flooding and extreme weather. Homes equipped with these devices may qualify for additional discounts. As part of your advisory role, encourage your clients to consider these installations if they’re in areas prone to specific risks, such as flooding or power loss.
- Newer vs. Older Homes
Newer homes often come with updated building codes, better materials, and modern systems, which can make them less risky to insure. Insurance companies may offer lower premiums for new homes, whereas older homes may be more expensive to insure due to outdated systems or a higher risk of maintenance issues. For clients considering an older home, make sure they understand how this could affect both premiums and the coverage they need.
- Other Discounts to Look For
Beyond the more common discounts, there are other opportunities to lower premiums, including bundling home and auto insurance, loyalty discounts for long-term clients, or claims-free discounts for homeowners who haven’t filed a claim in several years. Work with a knowledgeable insurance broker to help your clients explore all the available savings.
Working with a Brokerage Is the Best Option
While online tools and direct-to-consumer insurance providers might seem convenient, working with a brokerage offers significant advantages. A brokerage like Cassidy & Young works with multiple insurance companies, giving your clients access to a wider range of policies and better rates. Brokers also have in-depth knowledge of the insurance market, allowing them to tailor policies to meet each client’s unique needs.
In addition, brokers provide a level of personalized service that online providers can’t match. They help clients navigate complex insurance terms, recommend the best coverage for their needs, and advocate on their behalf if issues arise. By partnering with a brokerage, your clients can rest easy knowing they have an expert on their side.
Conclusion
As a realtor, you are uniquely positioned to help your clients navigate the complexities of home insurance. By staying informed about industry changes, understanding what insurers are looking for, and guiding your clients to the right coverage, you’ll add immense value to the home-buying process. The more you can educate your clients on home insurance, the better prepared they’ll be to protect their home—and their investment—for years to come.
By working together with a trusted insurance broker, you can ensure your clients get the best coverage at the best rates, while also positioning yourself as a knowledgeable and reliable advisor in all aspects of home ownership. Helping your clients secure the right insurance isn’t just good for them—it’s good for you, too!
