No two home insurance policies are the same, because no two homes are the same. Your home insurance policy is specifically curated for you as the homeowner and of course, your house! Insurance carriers look at several different factors when determining your policy premium, things such as your home’s location, claims history, rating, the cost to build after a loss, what your made is made of, among other things. Let’s review how each of these factors impacts your homeowners insurance rates and what you can do as a homeowner to help lower your premium.
Big Things That Affect Your Home Insurance Rate
Cost to Rebuild Your Home After a Loss
A large part of how your home insurance premium is calculated is affected by how much coverage you want for your home’s replacement costs. For dwelling coverage, you want to have enough protection to be able to completely rebuild your home after a total loss at your home’s current value. Insurers typically use appraisals or valuation databases to determine your replacement cost when you purchase your policy, but it’s ultimately up to you as the policyholder to purchase the correct amount of coverage. The reason being is if you purchase too little coverage, in the event of a total loss, your insurance carrier would only pay out a certain amount leaving you to foot the rest of the bill. But, if you purchase too much coverage you’d be overpaying for insurance that you’d never be able to make a claim on.
The best thing you can do as a homeowner is have your home appraised every few years to ensure you’ve got enough dwelling coverage to fully cover construction costs for your home. Just because construction costs have risen over the past few years, does not mean your insurance company will pay out more because of it. It’s up to you as the homeowner to have the right amount of coverage. You can purchase optional policy add-ons such as replacement cost provision, an inflation guard endorsement, or extended dwelling coverage, but just having your home appraised may be the easiest route!
TGSI Tip: If you’ve updated your home in any way, whether that be updating your kitchen, a bathroom, or adding on to your home, talk to your insurance agent about increasing your dwelling coverage to cover these new renovations.
Like anything in life, your credit score will greatly impact your home insurance premium. Generally, a higher score will result in a lower premium, and vice versa. But, those with less than ideal credit won’t ever be denied home insurance coverage, those homeowners will just see a higher rate.
Insurance is there to help you financially when you need it most, but those who file too many claims could see a rate increase or higher premium than those with a lower claims history. The reason being, is insurance companies look at their policyholders based on a risk level, and those who file a ton of claims are seen as high-risk. Filing too many claims could result in the insurance carrier refusing to write you a new policy, being denied by other carriers, or just flat out paying more for home insurance. Some insurance companies offer policyholders great discounts for not making any claims in a specific time frame (usually a two-to-five year period). With all of this being said, you shouldn’t be afraid to file a claim if you need to, that’s what insurance is for, but be mindful of how many claims you’re filing and if they’re worth the possible financial consequences later down the road.
Your Chosen Insurance Carrier
Who you choose to purchase your policy with will have a big influence over your yearly premium. Some insurance agencies will charge more for the same coverage than others, which is why it’s incredibly important for homeowners to continuously shop their home insurance policy every year when it’s time to renew to avoid overpaying for home insurance. However, shopping your policy with multiple providers can be a time-consuming and tedious process, and TGS Insurance is here to help. Our team will shop your home insurance policy across our suite of 35+ A-rated (or better) carriers to find you a policy that’s perfectly balanced in the coverage you need, at a value that’s right for you. The best part? We don’t stop at a great quote. We’ll handle everything from start to finish for the easiest home insurance shopping experience you’ve ever had! And we’ll do this year after year, to ensure you are always paying the lowest rate the market has to offer without ever sacrificing on coverage. Get your hassle-free quote today in just 15 seconds or less, using just your address!
Moderate Things That Affect Your Home Insurance Rate
Your Home’s Proximity to a Fire Station or Hydrant
Insurers look at what “territory” you’re living in to see if your home is located within five miles near a fire station or 500 to 1,000 feet within a hydrant in case there’s a fire. Additionally, they also look at the quality of the water supply and fire station to see if your area’s fire protection is up to snuff. (Remember, it’s all about risk!) If you live in an area that’s got adequate fire protection, the insurance carrier assesses your home as being in a “protected” area therefore your home insurance premium will reflect that. However, if you’re not, you might see a 40%-60% increase than those in protected areas.
Your Home Insurance Deductible
If you’re looking to save some money on your home insurance, raising your deductible will certainly help. A deductible is the amount you’ll pay before insurance will kick in and help cover any costs. Each carrier calculates its deductible differently. Some require a dollar minimum, such as $1,000 whereas others may have you meet a certain percentage of your dwelling coverage. As stated earlier with claims, your insurance is there to help you pay for losses you otherwise couldn’t pay for, so just keep that in mind when deciding what you want your deductible to be!
Your Home’s Age
The reason insurance agencies look at your home’s age when calculating your premium is because older homes are riskier to insure, plain and simple. Why? Because they’ve typically got older wiring, plumbing, fragile, older construction materials, etc. If you’ve got a home that’s less than 10 years old, you may actually see a new home discount, and if your home is less than 25 years old, you may see some discounts too!
What Your Home Is Made Of
Homes made of noncombustible materials, such as concrete, metal, brick, stone, or adobe will see the lowest insurance premiums because they’re the least likely to get destroyed in a fire or other destructive event. Homes made with wood, vinyl, or aluminum siding will see the highest premiums because they’re made of combustible materials.
If you’ve got more than one policy with an insurance agency, you’ll likely see a drop in your rates because of bundling discounts. Depending on what policies you’re bundling, you can see a discount of anywhere between 5% to 25% on each policy!
Minor Things That Affect Your Home Insurance Rate
Home Security System
Insurers like homeowners that have taken precautions to prevent named policy perils, such as theft or vandalism. Having a home security system, deadbolt locks, fire alarms, burglar alarms, and adequate fire extinguishers will all help shed some dollars off your home insurance premium. If you’re thinking of installing a home security system, be sure to ask your insurance agent about what systems your insurance carriers offer discounts for so you can take full advantage of any available savings!
Man’s Best Friend
Unfortunately, some dog breeds are considered “dangerous” to insurers because they’ve caused a high number of dog bite claims. If you’ve got a dog breed that’s on your insurance carrier’s “high risk” breed list, you may have to pay a higher premium or your dog will be excluded from coverage altogether. The reason being is the insurance carrier is trying to minimize any chance of liability claim payouts.
Other Small Factors That Can Increase Your Home Insurance Premium:
- A roof that is older than 20+ years
- Your roof is made of wood shingles
- Fully or partially finished basement
- If your garage is located beneath a living area
- Your electrical system doesn’t have a circuit breaker
- Your furnace is older than 20+ years
- You have a fireplace or wood-burning stove
- You have a pool, hot tub, tennis court, or trampoline
Save on Home Insurance with TGS Insurance
Home insurance is something every homeowner should have because the risk of not having it far outweighs going without it. At TGS Insurance, we want to help you find the best home insurance policy for your needs and your budget. Whether you’ve got an old home, new home, great credit, poor credit, we help clients of all kinds find the perfect insurance solution for their situation. Get started on your hassle-free quote today and see how much you could be saving!
Article Source: Consumers’ Checkbook