There are a handful of factors that could have a direct impact on the overall cost of your homeowners insurance. Whether these factors result in higher or lower costs may or may not be up to you, but at any rate, it’s a good idea to know what they are so you can effect whatever change that you can:
- Plan Deductible: While this may not be a standard rule across all available insurance policies, a low deductible likely means you pay higher premiums. While this may seem attractive in the event that your home experiences covered damages, you still have to pay more each month for coverage. On the other hand, if you have a comfortable emergency fund to work with, you could opt for a plan with a higher deductible to get lower premiums. This way, you pay less each month to keep your insurance and can have your emergency fund help cover the higher deductible.
- Your Insurance Company: Simply put, home insurance companies are competing for customers nationwide. With that in mind, some may have higher insurance rates than others. Before you commit to a specific company, it might benefit you to shop around to find a company with lower rates. Just be careful and make sure you’re not inadvertently losing needed coverage just to lower your monthly payments.
- Your Home’s Age: Older homes are generally more expensive to insure because they often lack many of the safety features of newer homes. They also tend to be built with less sturdy materials than newer homes, although this might not always be the case.
- Your Home’s Roof: Roofs that are older or made with less sturdy material are more susceptible to windstorm damage. If your roof is made of sturdy material, like asphalt, you’ll likely pay a lower rate.
- Renovations: While renovations might be a huge source of expenses, they could ultimately lower your insurance rate. If you renovate your home and update various aspects (such as adding safety features like updated smoke detectors ), you could find your overall insurance cost go down.
- Crime Rate: If you live in an area with a high crime rate, you’ll likely pay higher rates each month. Insurance companies deem an area to be at risk of crime based on the number of burglary and vandalism claims they receive in that area. By adding a security system or upgrading to dead bolt locks, you could see your insurance rate go down.
- Your Dog: You may love your dog, but insurance companies make their own lists of what they consider to be “aggressive breeds” that are more prone to cause home damage (such as tearing up carpets or chewing furniture). If you own a dog that is considered to be an aggressive breed, your insurance rate can go up or you may be denied coverage altogether.
- Special Features: If you’ve installed things like swimming pools or trampolines, you may see your insurance rate go up. This is because extra amenities like these, while fun and enjoyable, create a higher risk of personal injury for you and your visitors.
- Your Claims History: If you are regularly filing insurance claims, your insurance company may view this as a sign that your property is riskier to insure. In short, the more claims you have in your claims history, the higher your insurance rate will be.
- Your Credit History: If you have a good credit score, your insurance company will take that to mean that you will always pay your premiums on time, and your rates will go down. If you have bad credit, then your rates will go up. Generally speaking, paying bills and paying off credit cards on time can help you maintain good credit.
- Excessive Coverage: It makes no sense to have coverage for things that your home is not at risk of experiencing. For example, if you do not live in an area that has frequent wildfires, maybe don’t spend the extra money on expanding wildfire coverage. The same goes for things like flood insurance or earthquake insurance.