Home Insurance Articles
What Factors Affect The Price Of Home Insurance?
2009-11-22
The cost of home insurance is based on a number of factors. Some of these factors are beyond the control of the homeowner while others directly relate to the buyer. Most factors that affect the cost of homeowner's insurance fall into one of three categories: location data, house specifications and homeowner statistics.
Home insurance companies first compile location data with information about the geographic area a home is in. This data includes such information as how many people live in a certain area, the crime rate and the number of accidents in the area. These issues all play a part in determining the cost of home insurance. Other factors are related to house specifications. Most home insurance companies send a surveyor to questions about the home. The company will want to know the size of the home, the number of bedrooms and bathrooms, the type of plumbing and electrical work, and the available safety precautions. Consumers can cut down on the cost some by adding in safety features not already available. These features include items such as carbon monoxide detectors, smoke detectors, fire extinguishers and fire escapes. The company will take into account all factors that may cause an injury in the home.
The third group of factors influencing the cost of home insurance relate to homeowner statistics. Pulling the owner's credit score and asking for information about work history is usually part of a home insurance quote. The company also will want to know if you own so-called dangerous dog breeds, such as pit bulls and Rottweilers. These kinds of personal choices matter to the insurance company. The insurance company representative also may want to know about the types of valuables you have in the home in case of robbery or complete destruction, such as in a fire. With a complete destruction of the house, most insurance policies pay out a percentage above the value of the home to cover the replacement of property within the home.
Also be sure you find out how much coverage you are getting and the deductible you are expected to pay. Altering these amounts can go a long way toward helping you get a better rate. Many homeowners' insurance companies also will ask you about certain riders to the standard policy. These riders cover a number of "non-standard" issues, such as basement damage from an overflowing sump pump. Look at these riders carefully before deciding whether or not to buy them. Some such riders are valuable and definitely worth the money, while others are not.
When buying a new home, understanding what goes into determining the cost of your homeowner's insurance premium is important to the rate you will ultimately pay.