What determines the cost of your homeowners’ insurance? You don’t want to forget about insurance when buying a house—after all, it’s one of the most important parts of homeownership and can cover some surprising things. Though it increases your monthly costs, homeowners’ insurance is necessary to protect yourself and your neighbors from financial ruin. Many factors can influence the cost, including the age of your home and the location. Learn more about the how homeowners’ insurance cost is determined.
Homeowners’ Insurance Cost Factors
Many things factor into the cost of your insurance, and each provider uses different metrics. Certainly, one of the main facets that will affect your rate is the provider you choose. Still, what determines the cost of your homeowners’ insurance varies by provider. The most common factors include:
2. Replacement Costs
3. Insurance Score
4. Marital Status
5. Claims History
6. Amount of Coverage
8. Security System
9. Age and Condition
10. Dog Breed
1. Where You Live
The location of your home is one of the biggest factors that affect your insurance premiums. Providers use metrics to determine how safe your neighborhood is and if common disasters occur there often. For instance, people who live near a coast pay the highest premiums—especially if your area is susceptible to hurricanes. Furthermore, living in tornado, fire, and earthquake zones may also raise the price of your coverage. Even claims made on nearby homes may influence your insurance premium if providers determine it means you live in an unsafe area.
Pro Tip: Some aspects of where you live can help you save money. For instance, providers may cut you some slack if you live near a fire station, because it puts you in a safe spot.
2. The Cost To Replace Your Entire House
Another major factor that can alter the price you pay for insurance is the replacement cost of your home. The more your home costs, the more it will cost to insure it. Larger homes also cost more to insure, but providers consider other factors as well, including:
- Style of home
- Special features like fireplaces and whirlpool tubs
- Local construction costs
- Number of rooms
Pro Tip: Remember that replacement cost is not the same as market value. While many people insure their homes for the cost of the mortgage, you may need an appraiser to determine how much it would cost to rebuild your entire house.
3. Your Insurance Score
While states like California can’t take your credit history into account when determining your rates, they can look at your insurance history. The length of time you’ve had a policy and whether you have gaps in coverage can greatly affect how much you pay. Similarly to keeping a good credit score, you can maintain a good insurance score by avoiding financial trouble such as debt and bankruptcy.
4. Your Marital Status
Providers typically charge married couples lower rates than single people. This is because married people tend to be more responsible and historically file fewer claims. Many assume that married couples are more mature because they are likely maintaining their homes for their family.
5. How Many Claims You’ve Had in the Past
Claims filed at previous residencies can follow you to a new one. The amount your insurance may increase will depend on the number of claims you have made in the past and what they were for. Natural disasters may cost you less than theft or vandalism—unless the crimes are recurring.
6. You May Need More Coverage
A major factor that determines the cost of your insurance is how much insurance coverage you opt to buy. For instance, you might collect fine art or own expensive instruments or tools. You can insure personal items, but the more coverage you need, the more you’ll pay. While liability insurance is required, your rates will go up if you need additional coverage for earthquakes, floods, and medical payments.
7. Choose the Right Deductible
The right deductible amount for you will depend on your financial situation. A deductible is the amount you’ll pay if you need to use your insurance. For instance, if your home incurs $2,000 in damages, and your deductible is $1,000, you’ll only pay half the cost. The higher your insurance deductible, the less you’ll pay per month for your plan. Still, you don’t want to put yourself in financial ruin if you can’t afford a $1,000 repair.
8. Install Security Features
You may get a deal on your insurance if your home is equipped with security features that help keep it safe. For instance, you can install an alarm system, fire detectors that contact your local station, windows and doors with deadbolts, and motion detection floodlights. Security features make it less likely that you’ll file a claim, so providers often lower premiums if you utilize them.
9. The Age of Your Home and Its Condition
Since age is a major factor in the cost to rebuild your home, it’s also a major factor in determining the cost of your insurance. Homes with old plumbing and ornate trimming that’s out of date are often more expensive to fix. The condition of the home and previous claims made there can also affect the price of your coverage. Providers often look at the roof as a huge indicator of the condition of your home.
Pro Tip: Maintenance and security features can help keep costs low on a vintage home. Ensure sprinklers work and install updated appliances.
10. Certain Uninsurable Dog Breeds
You can be liable for quite a few things in your own home. Did you know that some dog breeds are uninsurable? If you own a rottweiler or a pit bull, you’re probably used to people thinking your dog is vicious. Unfortunately, providers also show prejudice against dangerous dog breeds and may not insure your home if you have them. The reason your rates may rise is due to the increased bite risk. Liability insurance protects those injured on your property, and providers fear that a dog could increase your claims and the need for providing medical aid.
Pro Tip: Dogs with a bite record are the hardest for providers to trust. Regardless of your situation, you may receive a lower rate if you take your dog to behavior classes.
Live a responsible lifestyle to get lower rates on your home insurance. Knowing what determines the cost of your homeowners’ insurance can help you avoid high premiums. Secure a monthly cost you can afford when you hire a homeowners’ insurance agency that has your best interests in mind. Contact Saferoad Insurance for tips to help you lower your premiums. You can explore our blogs to learn more about what determines the cost of your homeowners’ insurance and other types of insurance too.