What are the Factors that affect homeowners insurance premiums?
Insurance companies consider several factors which are known and unknown to most people. For home insurance, the insurers will consider the place of living, any issues in the home, and also the credit score and the history of claims.
There are a few key factors that will influence insurance rates.
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Replacement cost
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Deductible
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Dog breed
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Wood-burning stoves
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Home-based business
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Remodeling
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Home liability limits
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Insurance score
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Marital status
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Age and construction of the home
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Swimming pool or hot tub
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Roof condition
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Proximity to the fire station
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Location and how close you are to a body of water
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Credit history
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Claims history
Replacement cost
Always choose the premium cost by considering the home’s value otherwise will lead to financial instability during the unfortunate event. This is one of the mistakes the homeowner makes. Replacement cost is the total amount of money that will cost to reconstruct the home at the same place. And this varies from the market value because the market value will depend on the land’s value. Most people will only choose the insurance plan based on the down payment. They will not consider the home’s value And this rate will be the lowest while considering the total home value.
Deductibles
A deductible amount is a total cost that you pay for the loss before claiming the insurance. And choose wisely the deductible amount. As the deductible amount increases, the premium cost will reduce. This also depends on the place we live. For example, if you are living in a disaster-prone area then the deductible amount will also include separate costs or certain other things. If you live on the coast in the East, your windstorm deductible may be distinct; if you live in a state prone to hail storms, your hail deductible may be separate; and if you live in an earthquake-prone area, your earthquake policy may include a deductible.
If there is a pet
Some insurance companies will not insure if the home consist o a pet especially some breed dogs. You need to tell this before you have a pet and if it is an aggressive dog. There is a chance of increasing the rate by the insurance companies. But some may not consider this factor.
Wood burning stoves
A wood-burning stove is very economical and also saves energy. But this leads to an increase in the insurance rate. But you can get it reduced by proving that the stove was installed by a licensed contractor and it meets all the requirements. Installing smoke detectors and fire extinguishers will also help to reduce the insurance rate.
Business
If you are handling a home-based business, It would be good as it protects your equipment, machinery, and other things. Here are a few options for it:
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Add an "endorsement" to your current policy.
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Purchase a specific in-home business insurance policy.
And suppose if your business is lost due to home damage then the home insurance will cover all the business loss and ongoing expenses. The insurance policy also covers the loss of all the documents.
Remodeling
Any of the remodeling done to the home whether it is a kitchen renovation or a bathroom will affect the insurance rates. Because this eventually increases the home’s value. So make sure to inform the insurance broker or insurance firm about the renovations or remodeling that has occurred in the home. Even the materials and the construction will be considered and thereby the premium cost will be increased.
Home liability limits
There are several personal liability limits and this should be considered with utmost care. The amount can be used easily for medical expenses if there is any injury happening in the home.
Credit score
The credit score is the most important factor while considering an insurance rate. If the insurance score is low then the insurance firm will consider it to be a huge financial risk.
To improve your chances of getting a good insurance score:
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Defaulted debt should be avoided at all costs.
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Maintain a low credit card balance. If at all feasible, pay them in full each month.
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Have no tax liens, court judgments, wage garnishments, or bankruptcies on your record.
Age and construction of the home
The age of the home and the way it was constructed are important actors in the insurance rate. Size and location will result in the variation of the insurance rate. People with older homes are more into damages which results in a high insurance rate.
Swimming pool in the home
This will beautify your home but will increase the insurance rates. This is also applicable for the hot tub or outdoor spa.
Condition of the roof
If the roof is new then it will result in a reduced premium cost and if the roof is older then the premium will be high.
Credit history
Credit history plays a vital role in the insurance rate and the insurance companies will have variable formulas to calculate the credit.
Claim history
Even though you shifted to a new home your claim history will follow you.
By considering these factors, It is very important to choose the best insurance company with the best insurance rate.
