Buying homeowners insurance is not easy. The process of buying homeowners insurance can be frustrating, complicated and confusing. Sometimes, it’s difficult to accurately compare rates, since coverage isn’t usually identical from insurance company to insurance company.
However, to help you understand the factors that insurance companies use to determine your homeowners insurance rate, I’ve listed the top six factors that affect your homeowners insurance rates.
1. Value. When you calculate the value of your home, leave out the value of your land. Only consider the replacement cost of the dwelling at today’s prices.
2. Geography. The further your house is from a fire station, the higher your premium will be. So, homes in cities, where fire stations are close by, will have lower rates than homes in rural areas.
3. Contents. The value of your personal property is usually calculated by the insurance company as 50% of the dwelling value. So, if your personal property has value in excess of that amount, you need to increase the policy limits on Contents.
4. Liability Limits. Homeowners Insurance is a package policy with a minimum liability limit built in. I recommend that you increase your liability limits significantly above the minimum. Jury awards on liability claims can run into the hundreds of thousands of dollars. A minimum liability limit will leave you dangerously under-protected.
5. Deductibles. The deductibles you choose will have a significant affect on your insurance rates. Generally, the higher your deductible, the lower your rate. Always choose the highest deductible your budget will allow. Then, set aside one deductible in your savings account to take the financial pressure off your deductible choice.
6. Claims History. If your home is free of previous insurance claims, you’ll get the best insurance rates. If you have had previous insurance claims, the insurance company will consider those claims when they calculate your premium rate.
A change in any of these factors can cause a change in your homeowners insurance premium. Make sure that you fully disclose the correct information about each of these factors to your agent. That way, you’ll be most certain to get the lowest homeowners insurance rates you can.
If you have experienced an insured loss, whether auto, business, fire, wind, flood or other, you need to know winning insurance claim strategies. The insurance company will not tell you the claims process, but I will. I will show you how to take control of your insurance claim, and add hundreds or even thousands more dollars to your claim settlement.