Whether you live in a mansion on the hill, a cottage in the woods or a split level in the suburbs, you need to protect the possessions you worked so hard for. No matter where you live the roof over your head is likely the most valuable asset you own, and that means you need homeowners insurance – and lots of it.
As you get ready to make this important purchase it is important to understand the factors that make up that monthly premium. Knowing what underwriters are looking at will make it easier to get the coverage you need at a price you can afford. Here are the factors that will impact your premium, along with some tips for making those costs more affordable.
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Location, Location, Location
When it comes to real estate the three most important factors are location, location and location. That is true not only for home buyers and sellers but for those who need insurance as well.
From crime rates to issues with climate change and local weather challenges, a number of factors are used to determine relative risk. Since the insurance business is all about risk the area you live will obviously be a significant factor.
Size and Value of the Home
The homeowners insurance you buy will be based on the value and replacement cost of your home. The more your home costs the more you can expect to pay for coverage.
The size of your home is also a factor, especially since larger houses usually come with a higher value. The agent will assess the value of your home when you apply for coverage, and insurers may reassess the value from time to time.
Outbuildings on the Property
Homeowners insurance covers not only the place you live but any other structures on the property. If you have a garage, storage shed, barn or other outbuildings that added value could drive up the cost of your premiums.
It is important to tell the agent about all outbuildings on your property, so gather as much information as you can. That includes the sizes of sheds and other buildings, as well as the construction materials used to erect them.
Pets
You love your pets, but owning certain animals could drive up the cost of your coverage. In many parts of the country dog breeds with a history of aggression could cost you more, or even render you uninsurable.
Keeping a horse at your home could result in a similar rise in premiums, especially if you also give lessons or engage in commercial equestrian activities. Be sure to let the agent know about your babies so you do not miss out on the coverage you need.
Age and Condition of Your Home
Older homes may have their charms, but insurance underwriters may not see it that way. As your home ages the odds of something serious going wrong goes up – a fact that is not lost on insurers.
When you apply for a homeowners insurance policy the company will oil its homework, researching the year your home was built and taking a look at its condition. You may not be able to make your home younger, but you can do your part to keep it in top shape.
The Deductible You Choose
When it comes to insurance the deductible and premium typically move in opposite directions. If you want an easy way to lower your premium boosting your deductible is always a good place to start.
If you are in the market for a new policy or shopping around for a new one it pays to get quotes at various levels of deductible. Keep in mind that making small dollar claims could result in higher premiums going forward, so paying for minor repairs out of pocket could actually be cheaper in the long run.
