What are some factors that determine the cost of homeowners insurance?
Before you learn about ways to reduce the cost of your homeowners insurance, it’s important to know some factors that determine it. There are many factors at play and different insurers weigh each differently, but generally these circumstances will determine how much you pay for homeowners insurance.
Estimated replacement cost of your home:
Replacement cost is the amount it costs to rebuild your home from scratch, including the price of labor and materials, in the event of a covered loss.
Natural disasters, population and the overall likelihood of a claim in your area are associated with your location.
Amount of coverage:
Aside from your dwelling coverage, coverages such as liability, other structures, personal property, endorsements and more also play a factor.
When you maintain a higher deductible, you share in a greater portion of the loss. This typically results in a premium reduction.
Home age and condition:
A newer home with newer systems will usually be cheaper to insure than an older home with older systems.
Certain claims can cause a direct increase in your premium. Other claims can increase your premium if you lose discounts for being claim free.
If your home is located in an area prone to wildfires or hurricanes, your premium can be higher.
Distance from fire stations:
How far you are from a fire station could play a role in how much damage is done should you have a fire.
Roof age, condition and material type:
Lots of claims can stem from a poor roof. Wind can blow off old shingles, and water can seep through them more easily. So if your roof is in good condition, you may get a break on your homeowners insurance premium.
Home safety features:
The safer and more secure your home is, the less likely you are to experience theft or vandalism.
Not every insurance carrier has the same method of calculating premium. That’s why you’ll get varying quotes from different carriers.
Having more than one policy with an insurer can get you discounts for multiple lines.