Why You Pay What You Do For Home Insurance!

Factors that determine your cost

There are a lot of factors that go in to calculating your homeowners insurance rate. Everything from where you live, to the type of home you own, to your insurance claims history can affect the amount you will pay. Know why your rate is what it is by checking out this article on home insurance cost. Some of these factors include, but are limited to:

Some of these factors include:

Type of Construction– The methods and materials used to build your home will greatly affect your home’s ability to withstand storm damage, fire and other perils. Typically, brick homes will cost less to insure while stick frame homes will cost more. This is because brick is not only stronger than wood, but also less flammable.

Age of Home- Older homes are riskier to insure than new homes as there are more possible things that can go wrong with an older home. Newer homes normally qualify for new home discounts as insurance companies are aware that the roof and mechanical systems are newer and less likely to fail.

Location- The location of your home can greatly affect your insurance premium. Homes in urban areas may cost more to insure than a suburban home as urban homes are more at risk for burglary. Homes located in areas that are more prone to specific perils (i.e. coastal) will also pay more for home insurance. The location of your home in respect to the vicinity of a fire department and fire hydrant can also affect your insurance premium. The closer you live to a fire department and fire hydrant reduces the chance that your home will experience a total fire loss. The city you live in is assigned a fire protection class rating which is used by insurance companies to determine your premium.

Deductibles and Coverage Amounts- Deductibles are set differently for every homeowner policy. Your deductible is how much you will pay per claim or accident before the insurance company starts paying. If you have a $500 deductible, you will have to pay $500 towards any claim before your insurance coverage kicks in. Someone with a $250 deductible would pay less in the event of a claim, but would have a higher annual/monthly premium to compensate.

» See FAQ: How does my home insurance deductible affect my premium?

Dollar Amount of Coverage- The amount of coverage you buy for your home will also affect the price you pay. Your dwelling coverage is determined by a list of factors that take into consideration the local building costs and square footage of your home. If you have $300,000 dwelling coverage, your home is protected up to $300,000 in the event of a total loss.

Endorsements- If you purchase additional coverage on your home insurance policy you will also pay more- but you will also be more protected. Additional coverage is also referred to as endorsements. Some endorsements include, replacement cost coverage for dwelling and contents, inflation guard protection and refrigerated property coverage.

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