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10 Factors That Highly Influence Home Insurance Rates

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Home insurance rates can vary wildly from property to property, place to place and person to person. If you know how insurers determine them, you could avoid buying a home that’s likely to be costly to insure, or you may be able to drive down what you pay on your existing place. Either way, it’s worth reading on to discover the 10 factors that most affect the rates you pay.

1. Your State and Region

Average rates for homeowners insurance may vary wildly from state to state. You can pay not far off four times as much for coverage in Florida than you would in Idaho.

This is largely accounted for by differences in risks created by the local climate. If you live in a region where hurricanes, tornadoes, flooding or wildfires are common, expect your home insurance payments to hurt.

2. Your Neighborhood

When providing you with a quote, insurers are likely to drill down to data and information for your neighborhood or immediate area. Are there lots of burglaries there? Are your neighbors unusually prone to accidents? How far are you from the nearest fire station and water source for firefighters?

3. Your Home’s Construction

Timber is a fantastic construction material, but it burns easily and can fall victim to damaging pests, including termites. Homes mainly built of stone, brick and concrete are often less costly to insure.

However, wooden homes tend to withstand earthquakes better, so if you live somewhere that’s an issue, your insurer may charge you less for coverage than your neighbor pays for her brick house. Insurance carriers like buildings that are suited to the challenges of the local environment.

4. The Cost of Rebuilding Your Home

The cost of rebuilding your home if it were to be burned to the ground or totally destroyed by wind, flood or other disaster may be higher than you think. True you still own the land, but you have extra expenses, such as clearing the site of debris. And costs can spiral if the site is remote, difficult to access with heavy trucks and machinery or on a steep hill. Expect insurers to take those factors into account when setting your rate.

5. The Age of Your Home

In some eyes, older homes have more charm than newer ones. But they may also be more costly to rebuild and more vulnerable to certain types of damage. As a rule, expect to pay more for coverage the older your home is.

6. Your Home’s Safety and Security

The more safe and secure you make your home, the more you stand to save on your insurance. Smoke detectors, ceiling sprinklers, security alarms, deadbolts and so on can all earn you cheaper coverage.

7. How Big Your Garage Is

This sounds crazy, but big garages attract burglars. Apparently, they may assume that the bigger one is, the more and more valuable its contents are likely to be. They may be right, and your insurer’s likely to think so.

8. Your Past Claims

Some people get through life without ever claiming on their home insurance. Others seem to claim with monotonous regularity. Insurers don’t like paying out, and tend to severely punish those in the latter group with higher rates.

9. Your Creditworthiness

People in financial trouble may be tempted to make spurious claims – or even fraudulent ones – in the hope of receiving some desperately needed money. And people who manage their money badly might have chaotic lives in other ways too. In states where permitted, your insurer may well check your credit score and adjust your home insurance payments accordingly.

In many states, people with poor credit can pay at least twice as much as people with excellent credit for the same homeowners’ coverage, so this is worth taking seriously. You can check your score and continue to monitor and manage it using the LendingTree credit score service, which is entirely free.

10. Your Loyalty to Your Insurer

Many insurers offer discounts to those who “bundle” their coverage. Bundling just means having more than one type of coverage with the same insurer. So, for example, bundling your home and auto insurance could earn you a discount.

Oh, and don’t forget the other way in which you can choose to pay less: upping your deductibles.

Your Best Deal on Home Insurance Rates

The “actuaries” (statisticians who specialize in assessing risks) whom your insurer employs to set rates look at hundreds of factors when deciding yours. However, the 10 above include the ones that are probably most likely to affect your home insurance payments.

Few Americans are going to choose their home on the basis of what gets them cheap insurance rates. But, over the years, you could save a lot of money by keeping your insurer’s needs in mind, and trying to meet it at least half way.

Of course, one of the best ways of saving money on your coverage is simply never to renew without first doing some comparison shopping. So check the market for lower rates now – and every year.


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