NYC Insurance Blog

7 Factors that Affect the Cost of Homeowners Insurance

Homeowners can pay more or less depending on various factors like location, square footage, and lifestyle. Understanding what insurers use to determine your premium is crucial to choosing the right insurance company and coverage options. Factors that affect the cost of your homeowners insurance include:

Location

Your location determines the amount of money you pay in premiums. If you live in an area prone to natural disasters like floods, hurricanes, and wildfires, you pay higher insurance premiums because the cost of insuring your home is higher. Also, if you live in the city, your premium rates are higher than that of a homeowner in rural or suburban areas because building a house in a densely populated area costs more. Luckily, the location can reduce the policy rates. For example, you can pay less premium if you live near a fire station. Give us a call today, to shop around Homeowner's Quotes.

Age and Condition of Your Home

Older homes attract higher premiums because they are susceptible to damage. The appliances and systems become outdated with time, attracting higher repair or replacement costs. You will pay a higher premium if your home is vintage. Vintage homes have features that are costly to repair or replace. Your home’s condition is also important to an insurer. Even if your home is new, its condition can affect premium rates. For example, the older the roof, the higher the liability and the higher the premiums. A leaking roof is costly to repair, and it can cause severe damage to your valuable items.

Credit and Claims History

Your homeowners’ credit can reduce or increase your insurance premiums. Homeowners with a good credit score are deemed a lower risk and hence attract lower premiums. Good credit indicates a reliable homeowner who can make insurance payments on time. Insurance companies check the claims history to determine how often you file for claims. If you frequently file insurance claims, that’s a red flag, and you could pay more to insure your home in the future.

Policy Deductible

Policy deductible amount refers to the money a homeowner must pay before the insurance cover the remaining damage. Increasing your home insurance deductible significantly reduces the homeowners insurance premium. Remember, if you set your policy deductible very high, you cannot receive a decent claim payout.

Home Security and Safety Features

You can get a discount by installing security and safety systems in your home. Home security systems deter burglars, and that’s a good thing. You can get a discount by increasing security in and around your home. Some of the things that can help you get a discount from your insurer include:

• Installing fire alarms
• Reinforcing deadbolts and replacing old locks
• Secure doors and windows with deadbolts and locks
• Installing motion detection systems

Always inform your insurer if you add a new security system. However, take your time to determine the potential benefit of each security feature and cost to make informed decisions. Our Agents will try their best to get you as many discounts to lower your premium!

Replacement Cost

Replacement cost refers to the total cost of rebuilding your home. Highly-priced homes cost more to insure because they are costly to repair or rebuild. The replacement cost is based on factors like:

• Square footage
• Architectural style
• Size of your home
• Age of your home
• Local construction costs

Avoid confusing replacement cost with home market value. While the two might match, that’s not always the case. Home market value is determined by vast factors like proximity to social amenities, land, view, neighborhood, and other factors that attract potential buyers. However, replacement cost refers to the total cost of rebuilding an exact home in case disaster hits.

Additional Coverage

Depending on your needs, you can buy additional insurance coverage as a part of your homeowners insurance policy or a separate policy. Typically, disasters like floods and earthquakes are not included in homeowners’ insurance. Therefore, buying additional coverage is recommended if you live in an area prone to these disasters. Buying additional coverage increases your premium because you get additional coverage in case a disaster hit.

Final Thoughts

Although homeowners do not have complete control of home insurance premiums, their actions play massive roles in raising or lowering insurance rates. If you think your insurance premium is very high, consider shopping around and getting advice from a broker, Call Us Today!

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