The Insurance Challenge for First-Time Homeowners

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Why do first-time homeowner’s have a hard time finding insurance?

As of 2023, more than half (55%) of Canadian homebuyers were first-time buyers, according to the CMHC Mortgage Consumer Survey.

Insurance companies are all about risk, and many of them view individuals who are less familiar with all things home as being unaware of the responsibilities that come with home ownership. Here’s what that may mean for first-time homeowners.

Insurance History & Homeownership

Generally, a policyholder’s insurance history and past of home ownership are intrinsically linked. When someone buys a home, they almost always buy home insurance – meaning that they’ve likely been a homeowner for as long as they’ve been continuously insured. Buying your first home may also mean buying home insurance for the first time.

Some carriers, such as Max insurance, do insure first-time insureds. Others will not. Working with a broker will ensure you’re partnered with a carrier who covers homeowners regardless of their insurance history (or lack thereof).

Insurance pricing for first-time homeowners

Although some insurers may not insure first-time homeowners altogether, most do – however plenty will charge higher premiums until more history has been established.

First-time homeowners, at least from the perspective of the insurance carriers, may be unaware of their responsibilities as a homeowner. This can include regular maintenance items, such as checking smoke detectors, servicing HVAC systems, and cleaning gutters. They could be likelier to miss early warning signs of damages as a result, which can lead to more costly (and more severe) claims.

Lapses in insurance history

Risk and an insured’s history are very closely tied for many insurance carriers. Even if you aren’t a first-time homeowner but had previously owned a home, sold it, and then purchased a new one several years’ later, insurers may still interpret your profile like they would a first-time homeowner or first-time insured as a lapse in coverage can signal inconsistent responsibility.

A lapse in insurance history could also indicate a potential noncompliance, especially if the insured has a mortgage. Most mortgage lenders will require the homeowner to first purchase home insurance, to protect their investment in the property. Noncompliance with this legal obligation could be a red flag about how that policyholder handles their other financial responsibilities (like making insurance payments!)

Not all insurance carriers will consider lapses in insurance history as a sign of higher risk or even lower reliability. For some, it can simply be a data void – where insurers generally prefer a duration of prior coverage so they can assess their profile more accurately and look at things like claims frequency, payment history, etc.

The Best Way to Get Home Insurance for First-Time Homeowners

As a first-time home buyer, having insurance in place is essential to protect your brand new investment. Without prior insurance however, it can be hard to know where to start. Buying through a broker is easily the best way to find a plan that works for you, regardless of your ownership or insurance history, or even the type of home that you own. A broker can provide key information about your profile and match you with the carrier that can give you the best coverage at the best price.

Questions?

Your Insurance Broker,

Costen Insurance

Note: thank you to our friends at MAX Insurance for providing the content for this post!