In response to a recent post on auto and home insurance premiums going up in Ontario, Cindy, who buys her insurance through the Co-Operators, commented that her auto insurance premiums went up by 9.6 percent and home insurance went up by 22 percent. When she called, there was little the insurance company could do about the auto premiums but Cindy found that Co-Operators offered a 24 percent discount on home insurance if there was no mortgage on the home. As Cindy had recently paid off her mortgage, she qualified for the discount.

Turns out, Co-Operators is not alone. When I called our insurance provider — Belair Direct — to inquire about a discount on home insurance for a paid-off home, I was told that Belair’s discount on home insurance for a mortgage-free home is 15 percent. It’s a good bet that your insurance company may also offer a similar discount. A paid-off home is a giant step forward in achieving financial independence. Who knew that holding that mortgage burning party has side perks such as a discount on your home insurance?

This article has 28 comments

  1. Wow. I had no idea. We hope to be mortgage-free within 2 years. Thanks to you and Cindy for the heads-up!

  2. Wow, good tip. I’m going to check with my insurer on this one. Seems like a weird discount. Why do you suppose they would offer a discount to someone with no mortgage?

  3. Coincidentally, I just got off the phone with my insurance company and I found out that being mortgage-free helps, and they also checked out my credit score. It seems that insurance companies are willing to take into account just about anything that is correlated with claim risk.

  4. That is interesting, didn’t know it’s an incentive

    Although my mortgage is paid off, but there’s a HELOC against the house so I probably don’t qualify :)
    10% return on the HELOC > 15% saved on insurance =P

  5. Canadian Capitalist

    @gene: My guess is that insurance companies have found that mortgage-free homeowners make lower claims. I find it interesting that insurance companies seem to be rather quiet about this discount. Can’t recall if I was asked if there is a mortgage on the home the last time I shopped around for home insurance.

    @Michael: May I ask who your insurance company is and how much discount they are offering? Thanks.

    @Jerry: Yes, if you have a lien on the home through a Secured Line of Credit, you won’t qualify for the discount. It also may not be worth paying down the loan just to score this discount.

  6. Gene: If I may venture a guess, it could be that if a person/family has the mortgage paid off, then they have more in savings – assuming that people won’t go off on a spending bender once it’s out of the way – and more savings means less liklihood on claiming the smaller things? *shrug*

    Could it also be that if a fire/disaster wipes out the house, then the company has to pay the bank and the family to help purchase a new home? I’m a renter, so I don’t know the ins-&-outs of that stuff.

    • The reason a discount is offered for mortgage-free status( and to answer another’s question below- yes YOU must provide the actual discharge paper that ALL banks in Canada are required to give you after a mortgage payout- this is your proof should anything ever arise, that you have paid the debt to the bank in full)
      is if you are mortgage free then you likely will have the necessary funds (now available with no mortgage to pay) to maintain the home and as such there would likely be fewer insurance claims

  7. So, I’ve been mortgage free for 18 months now and will definitely ask about this. My question is, don’t you need to show proof that you are mortgage free? What kind of proof exists that says you are mortgage free anyways?

  8. MortgageFree: just show them there’s no lender on title :)

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  10. MortgageFree asked: What kind of proof exists that says you are mortgage free anyways?

    I submitted the “mortgage discharge” letter brom the bank. (Using TD Insurance Home and Auto.)

  11. Wow!

    So happy I can across this news as we our mortgage free and my home insurance policy renewal from PC Financial comes due at the end of March. The renewal I had received had already jumped 13%. I just called them up and the they too have a mortgage free discount which applies to our policy. Oddly enough – no proof was necessary.

  12. I am wondering if this also applies to auto insurance if you don’t have a loan on your automobile? Can anyone confirm this?

  13. I called my insurance (La Personnelle, in Quebec) and the agent said she never heard of this discount. So no rebate for me. I’ll try again with them and others a month before my policy is up.

    As for proof of being mortgage free: a title search will prove you have no mortgage. And if you lie about it to get the discount and later make a claim, it’s trivial for them to check the public record and see when exactly your mortgage was cleared. Then you are out of luck. Ouch!

  14. Got the discount — 10%. No proof was required of being mortgage free.

  15. Well next month i need to renew with co op ….so i’ll report back CC

  16. @MortgageFree…re auto insurance reduction with paid loan…I believe with car leases there is a slightly higher rate and I do think when we paid our car loan through the manufacturer off early and received the release as proof our insurance was reduced by a small amount. Our broker says when it comes to discounts there are few common ones and most vary per ins company. I say it’s worth a call though to ask about ALL discounts offered by your current company. I will say we’ve been with our broker for many, many years and the same insurance company for a quite a few…it paid off in spades with 2 previous accidents and having a rep who knows you very well to go to bat for you when needed.

  17. I tried our underwriter for a discount on our homeowners insurance, and they offer none. It seems even without any special discounts the cost of our Policy (Canadian Direct) is still way lower than others.

  18. 5% here – Portage Mutual, based in Manitoba. Not much, no incentive to pay off a mortgage early.

  19. The Co-operators were quick to tell us when we signed with them, that as soon as our mortgage is paid off, to let them know, so that they could give us a discount.
    I like that they told us this upfront.

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  21. Ok,reporting back on this deal…the % off is not the same for everyone(10 to 25%) and you must be HELOC free also…cost of letter from your lawyer and you have to sign off on a credit rating anytime they want it. oh one other thing ,you must have your car insurance with them too.

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  26. What if you paid off your mortgage but it is not discharged?
    Is this considered mortgage free?

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