6 Factors That May Impact Your Homeowners Insurance Rates
This post is part of a series of insurance blogs on Safeco.com showcasing the expertise of independent insurance agents and aimed at helping you understand important insurance coverages and issues.
A 2010 oceanfront home in Florida and a 1910 farmhouse in Ohio – they need different insurance coverage, so they’re going to have different insurance costs. But, the reasons aren’t always as obvious as radically different locales and ages. Even two nearly identical homes in an Arizona suburb can have drastically different insurance costs if, for example, one has an updated kitchen and a backyard pool while the other has an older kitchen and no pool.
A home insurance policy is tailored to the home it covers, and many factors, such as size, age, location, etc., can come into play when determining how much a policy costs. Let’s take a look at some of those factors, which can vary from state to state:
- Construction Type: What’s your home made of? Wood, steel, brick, stucco? Each has its own impact on your home insurance costs. For example, a wood-framed home is oftentimes more susceptible to damage from a fire, tornado or hurricane than a masonry home. Thus, in some instances, you may pay more to insure the former vs. the latter.
- Dwelling Insured Amount: You should insure your home for what it would cost to rebuild it. Let’s say you paid $300,000 for your home and some acreage. That doesn’t necessarily mean you need $300,000 worth of home insurance. If rebuilding the home would cost $200,000, then your dwelling insured amount should be $200,000. You will not be able to nor do you want to insure the land. On the other hand, if your home has a lot of customized or luxury features, the cost to rebuild may actually be higher than the market price – meaning a home you bought for $300,000 should be insured for $350,000. Needless to say, the dwelling insured amount factors heavily into your home insurance rates.
- Security Systems: These can equate to discounts on home insurance, but be wary of companies that claim a system will cut your homeowners insurance premium in half. It won’t. Depending on your carrier and the security system you select, you may see a 2 to 5 percent discount – still a worthwhile savings, plus you get added peace of mind. Call you independent agent for guidance before you install or sign up for a new system.
- Natural Disasters: In Florida, hurricanes are our biggest natural disaster risk. In other states, it’s wildfires, earthquakes, tornados or something else altogether. Based on your location, these risks can factor into your home insurance costs. In some cases and with some carriers, you might save if your home is built to better withstand severe weather elements, such as a home with a wind-resistant or hail-resistant roof. Your location may also prompt the need for a separate flood insurance policy, which can add to the cost of insuring your home – homeowners insurance does not cover flooding. Depending on the severity of the flood zone, your flood insurance costs will vary, and your lender may even require it.
- You: Yes, you play a role in your home insurance costs. For one, you choose your deductible. The higher it is, the lower your home insurance premiums may be. Additionally, in some states, such factors as your occupation and your credit-based insurance score can also impact how much you pay for a homeowners policy.
- Your Belongings: What you have inside your home – furniture, electronics, artwork, jewelry, guns, etc. – counts toward your homeowners insurance costs, too. The more things you have and the more they’re worth, the more Personal Property Coverage you need – at least if you want to protect it all.
You might be surprised by what all impacts your home insurance costs. It’s certainly not as simple as comparing what you pay to what your neighbor pays. You have to factor in all of the different finishes, materials and features of each home. Even your heating source can impact how much you pay for home insurance.
Personally, I pay a premium for living less than a mile from the Atlantic Ocean here in Florida. If I lived five more miles inland, my home insurance would probably cost 25 percent less – for the same exact home! I guess that’s the price you pay to be close to the beach.
As for what’s impacting your home insurance costs, reach out to your independent insurance agent for more insight. And, remember, your rating factors can change, so check in with your local agent once a year to review your insurance policies and make sure they are still a good fit for you.
Content provided by Safeco Insurance: http://www.safeco.com/blog-detail/how-much-does-home-insurance-cost/1240030870604