As a homeowner, you want to get the best home insurance you can afford. To do this, you should have a realistic understanding of the factors that affect homeowners’ insurance premiums.
Insurance carriers look at a range of considerations when making their homeowners’ insurance cost calculations. That’s the reason your home insurance premium is unlikely to be the same as your neighbors’, even though you live on the same block and have homes of roughly the same square footage.
To help you understand what affects the price of homeowners’ insurance, we’ve amassed some of the top factors your rates will be based on.
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Home Replacement Cost
If something devastating happens to your home, such as a fire that completely wipes it out to the foundation level, how much will it cost to rebuild it? That’s the question homeowners’ insurance companies must answer. They’ll take plenty into consideration, from labor and material, to the slope of your lot.
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Insurance History
Do you have a history of putting in homeowners’ claims for your current or previous properties? This may have a significant effect on how much you’ll pay in monthly premiums. Individuals and families that have never made claims are typically going to get better rates than those who have a record of getting insurance monies.
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Pet Ownership
Have a dog representing a breed associated with liability, such as an American Pit Bull or Rottweiler? Your home insurance carrier may increase your premiums or may not be willing to insure you for pet-associated incidents.
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Neighborhood
Living in certain neighborhoods may up your chances of incurring high premiums. If your area is designated as one where burglaries are commonplace, you can expect to pay more for your homeowners’ insurance.
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Geography
How long would it take for fire and rescue vehicles to reach your residence in the case of an emergency? The more remote your home, the longer the timeframe between when you make a 911 call and actually get help. From an insurer’s point of view, you’re more likely to suffer increased damage because of your distance from responders.
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Home Age
While you might have fallen in love with that early 1900s bungalow in the country, you might be surprised to learn that your insurance company is going to take into consideration its age and perhaps increase your rate. Older homes are more likely to be built from wood and will generally have more problems than new-construction residences.
Still a bit perplexed by the ways homeowners’ insurance rates are calculated? Talk to a local independent insurance agent who can explain your options in greater detail and help you make the best decisions for your home and family.
