It’s that time of year again when your home insurance renewal is due. Have you been thinking about what impacts the cost of your premium? The answer may be a bit surprising to some people – it isn’t just location. There are three main factors that go into determining the cost of your home insurance premium: house type, coverages selected, and location. We’ll discuss each in more detail below, so read on if you want to learn how to lower your premiums for next year!
Location
The cost of insurance can be influenced by your location. For example, living on a main road or highway may result in higher premiums because the risk level is elevated. Similarly, close proximity to water will also increase your premium rate since there are more potential risks involved with this area.
House Type
Another factor that impacts home insurance rates is the type of house you live in – apartment buildings tend to have fewer claims than single-family homes for instance. Riskier houses (e.g., wood frame) also impact how much it costs to insure them while newer construction typically requires additional money spent on liability coverage due to industry standards and regulations regarding safety measures.
Coverage Selection
Finally, what coverages you select will also make up part of determining home insurance premiums. For example, opting for replacement cost over actual cash value is a way to ensure you receive the full amount that it would take to replace your property in today’s market – but this typically means higher monthly payments on top of basic coverage.
While these are the three main factors that ultimately impact your home insurance premium there are some other considerations as well, like the age of your home and the amount your home is insured for.
Age of Your Home:
Insurance companies will typically charge more to insure older homes since they’re considered a higher risk. However, if you’ve made recent renovations or upgrades to the house (e.g., new windows) this can impact your premium rates because it reduces the risk level for insurance providers and offsets some of the costs associated with insuring an older home. Make sure you mention any additions when speaking with your agent!
Amount Your Home is Insured For:
Every time we speak with clients about what impacts their premiums one thing that surprises them is how much coverage really goes into determining the cost – after all, many assume it’s just based on the value of property vs price paid on monthly premiums which isn’t entirely accurate as there are so many other elements that get factored in.
So what’s the takeaway? While location and house type are still two of the main factors impacting your rates there is more to it than just these two things. Make sure you discuss with an agent what impacts home insurance premiums for you, so they can help find options and coverage packages that work best for all parties involved.
Disclaimer: This blog post is meant for general informational purposes only and may not reflect your specific policy.
