Homeowners should be aware of exactly what is shaping their insurance rates to gain a better understanding of what they’re paying for — and how they can save.
The following seven factors can affect your home insurance rates:
1. Square Footage
When considering insurance, a home’s size isn’t ignored.
Larger homes are more expensive to insure because they pose a larger risk for incidents to occur. More space means more items, more possibilities and more coverage. If you do have to make a claim, it will be more intensive than a smaller home.
2. Home Style
Not all homes are built the same, and a home’s style has a significant influence on the issues that are bound to occur down the line.
As a result of basic construction differences, certain claims are associated with specific home types. Because of this, the type of home you buy will affect your insurance rates.
3. Construction Materials
Homes that are built with high-end materials have a correspondingly high insurance rate, whereas lower-budget homes will cost less to insure. What your home is built out of contributes to the insurance policy because it will need to be replaced in case a claim is made.
4. Property Age
If not taken care of properly, homes deteriorate with age. To an insurance company, an older home represents a greater risk for damage and problems.
The diligent homeowner, however, can overcome this generalization by alerting their insurance agent to recent repairs, renovations and damage-mitigating systems they have in place.
Although it seems like everybody is caught up in having the latest and greatest home amenities, these items actually can cause your insurance rates to spike.
Home features, such as garages, decks and sheds, will cause your interest rates to increase. Potential risk factors such as pools, hot tubs, fireplaces, trampolines and swing sets and even certain animal breeds will also affect interest rates.
6. Neighborhood Considerations
Insurance companies aren’t only keeping their eyes on your household. They’re zooming out and considering the neighborhood at large.
Your area’s crime rates, insurance claims and proximity to risks like lakes and rivers will cause your interest rates to respond accordingly.
7. Credit Score
The homeowner’s credit score is often overlooked when setting insurance rates. Insurance companies use this score to understand how well you’ll keep up with your insurance bills — and how much of a risk you’ll pose to the insurer.
For some, this can be beneficial, but that won't be the case if you have a low credit score. If you’d like to skip this consideration, you can opt-out of this step. Just be sure to inform your insurance company upon applying.
Always consider these aspects to better understand which factors will affect your home insurance rates. For more information, contact us today.