The cost of homeowners insurance depends on a variety of factors. Understanding the factors that have the biggest impact on your homeowners insurance policy can help you determine how much you can expect to pay each month. This review discusses these factors that have a effect on the cost of homeowners insurance in-depth. However, the best way to determine your expected cost for a home insurance policy is to discuss coverage with a reputable home insurance provider.
What Is Homeowners Insurance?
Homeowners insurance offers financial protection from natural disasters and accidents that lead to damage to your home, and which requires repair or replacement. There are different types of home insurance coverages, including:
- Dwelling coverage
- Coverage for structures
- Personal property coverage
- Liability exposures
- Medical expenses
- Loss of use coverage
Homeowners insurance is not required by law, but almost all lenders require you to have coverage if you take out a mortgage for your home.
Factors That Affect The Cost Of Homeowners Insurance
Every home is unique, and homeowners insurance providers evaluate each case individually to determine an appropriate cost for a policy. The more common factors that affect the cost of homeowners insurance include the extent of the coverage, home location and neighborhood, the condition of the home and the policyholder’s claims record and credit.
The Amount Of Coverage
As discussed, there are many types of coverages that can be included in a homeowners insurance policy. The extent of the coverage is perhaps the main factor in determining the cost of the policy. For example, your primary may be cheaper if it does not include coverage for more expensive personal property (i.e. jewelry). To ensure you get the coverage you need at the most affordable cost possible, be sure to evaluate your precise needs and consider filtering out the coverages that may not be applicable or overly beneficial for you.
The Location Of Your Home
Homes that are in areas that are at a higher risk of natural disasters typically require a more expensive policy. This is, of course, because the risk to the insurance provider is much higher. For example, a home that is close to the ocean may be more vulnerable to water damage from heavy rainfall, flooding or hurricanes. To combat this risk, the home insurance provider requires higher monthly payments. This ensures the homeowner is able to be properly covered for extensive damage repair if a natural disaster were to occur.
The Neighborhood You Live In
Neighborhood crime can also play a role in your homeowners insurance. One way to reduce your insurance costs could be to purchase a reliable home security system. This lets the insurance provider know that your home is adequately protected from theft and physical damage from burglars and other crimes that can leave your home damaged and in need of repair.
Condition And Age Of The Home
The condition and age of the home makes a difference in the cost of homeowners insurance as well. A home that is old and in need of renovation will require more expensive premiums. In addition, some home materials may help lower the cost of insurance as well. This is because some building materials are more weather resistant and less flammable than others. For example, a home made of brick may have lower premiums than a home made of wood.
Past Claims Records
Perhaps the main reason for a spike in your existing homeowners insurance policy could be your past claims records. Making a lot of claims can lead to high premiums in the future. In some instances, insurance companies will not allow the homeowner to renew their policy, and it can lead to spending more with another provider. To prevent this concern, consider limiting the number of claims you make and fixing minor concerns without making a claim.
The Home Owners’ Credit Score
Insurance companies are not allowed to refuse coverage to homeowners solely due to their credit score. However, many of them do take credit score into account when determining coverage costs. A higher credit score could allow for a discount, whereas a lower score could be potentially troubling if there are additional concerns as well.
Deductible Amount Chosen
Many homeowners can choose their deductible. A lower deductible means a higher premium. On the other hand, choosing a high deductible could significantly lower your premium cost. This is beneficial as it allows the policyholder to customize their coverage based on their needs and preferences.
Talk With Merchant Family About The Cost Of Homeowners Insurance
Are you in need of homeowners insurance or are you considering switching from your current homeowners insurance provider? If so, then consult with our professional and experienced team at Merchant Family today to learn more on the cost of homeowners insurance. We are glad to answer your questions, address your concerns and help you determine what you can expect to pay with your new policy.