homeinsurance

 

Here is the 2nd part of the article from the spring 2016 Insurance Institute Bulletin which talks about what factors insurance companies can use to determine the cost of insurance.

  • Home’s Age and Type of Construction
  • A new home’s overall structure is likely to be in better shape than that of an older home. Therefore, newer homes have lower homeowners insurance rates. Important features in a new home include:
    • Electrical wiring
    • Plumbing
    • HVAC system
  • Additionally, homes constructed with sturdy, fire-resistant materials like brick, concrete and stone are cheaper to insure than homes constructed with soft, flammable materials like wood.
  • Home’s Location
  • A home’s location impacts rates for homeowners insurance in a major way. Rates may be higher if:
    • The home is at-risk for wildfires, tornadoes or other natural disasters
    • The home lies in a high-crime area
    • Building costs in the area are high
    • There is not a fire station within 5 miles
  • Claims History
  • If you don’t need to file an insurance claim, don’t. Homeowners who file frequent claims pay higher rates for homeowners insurance. To keep costs low, handle small fix-it claims yourself.
  • Risk Factors on the Property
  • Properties with risk factors will incur higher homeowners insurance rates. Pricey risk factors include:
    • Swimming pools
    • Guest houses
    • Aggressive dog breeds
    • Trampolines
  • Many insurers won’t extend coverage for these perils, and some will deny coverage altogether.
  • Credit Score
  • The higher a homeowner’s credit score, the lower their risk level. Statistically, homeowners with good credit file fewer claims than homeowners with poor credit. As a result, they’re rewarded with cheaper homeowners insurance rates.