Homeowners Insurance - What affects your Home Insurance rates?

By Compuquotes Team on March 27th, 2008

Homeowners Insurance

Your home insurance premiums may be significantly different than your neighbors home insurance premiums. There are dozens of factors that underwriters and actuaries look at when determining rates or premiums of home insurance policies. In this article we will discuss a few of the factors that determine your rates.

Age of the Home
The age of your home can effect the rate of your home insurance policy. Statistically, older homes tend to have more problems. Problems associated with electrical work, roofing, plumbing and the list goes on. Some of these problems can result in a claim and as we know, claims are not what Insurance Companies want. Insurance Companies want to Insure an individual that may have 1or 2 unpredictable claims over the life of the policy. They limit risk by either raising the premium or not insuring those they consider risky. An older home with less than adequate electrical and plumbing work will have a higher premium.

Address of the home (where the home is located from Fire Station, Fire Hydrant etc.)
The address or the location of the home plays a role in ones Home Insurance rate. Trends show that certain locations, neighborhoods, subdivisions or zip codes have more claims than other. In addition to the statistical data a homes address in reference to a Fire Station or a Fire Hydrant will effect a Home Insurance rate. Think about it, would you insure a home that was 50 miles from the nearest Fire Station? It may take 30 minutes for the Fire Department to come on site. By that time, it's possible your home is a total loss.

Home Features (Square Footage, Siding, Roofing etc.)
Your homes size and features will also effect our homeowners insurance premium. Of course the larger the home or square footage the more material and content that needs to be insured. Your Home Insurance policy premium will also differ depending on the materials used for your Siding and Roofing. Typically, wood is more likely to involve a claim. Wood shingles or wood siding tends to catch on fire and contribute to water problems. Stucco or brick siding and asphalt or tile roofing materials are cheaper to insure as statistically they produce less claims. The amount of differentiation of premium from wood shingles to tile shingles will be different with each insurance company. Before you build or buy be sure to ask your agent to quote different materials to see if the upgrade in material is cost effective.

Home Amenities (Burglar Alarm, Swimming Pool, Fence etc.)
Home amenities such as a Burglar Alarm and Fence can often lower your Home Insurance rates. Other items like a Swimming Pool or Hot Tub tend to raise your Home Insurance rates. A Burglar Alarm and Fence can help reduce claims where the potential for a claim is better with homes that have Swimming Pools or Hot Tubs.

Dog Type

Believe it or not but some Homeowners Insurance Companies will not insure you if you own a dog breed that is considered high risk. Often times a Pitt Bull, Doberman Pincher, or Rottweiler are cause for alarm for most Insurance Companies. Notoriously these dog breeds have been associated with dog bites and injury thus Insurance Companies assume they are a liability thus a risk.

Coverage on Contents
The coverage on contents refers to all the junk you've accumulated. Things like TV's, DVD players, furniture, clothes and jewelry are all covered in your homeowners insurance policy. The amount of coverage you choose on your contents can raise or lower your home insurance premium. There are objects like antiques and rare or expensive jewelry that needs to be insured to a certain amount. These items will effect your total premium on your homeowners insurance policy.

Liability Coverage
Liability coverage like your content coverage will effect your premiums. The more liability coverage you have the higher your home insurance rates. Average liability coverage is $300,000 and is defined as, "insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person."

Finally, your deductible will effect your home insurance rates. Like other insurance policies the higher your deductible the lower your insurance premium. The lower your deductible the higher your insurance rates.

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