Are you a first-time homeowner that’s looking to minimize the costs that you pay each month on your insurance? Do you wish there was a way to lower them? If so, then you need to learn more about the factors that affect homeowners’ insurance premiums.
Doing so can help you find the perfect fit for your needs. You’ll be able to find the right coverage and get a higher return on your investment. There’s a balance to be had between the two!
See below for a list of factors that affect your homeowners’ insurance premiums, and how you can use it to your benefit.
1. Your Coverage
As you might expect, your homeowners’ insurance policy’s coverage will play a role in the cost of your monthly premiums. Simply put: the more coverage you have, the more it will cost you.
Contrary to popular belief, the goal shouldn’t be to have as much coverage as possible or pay as low a premium as you can find. It’s about finding a balance between the two.
In other words: how much coverage do you need? For example, if you only need around $300,000 worth of liability coverage, you’d be wasting money paying for $500,000 in liability coverage. That’s $200,000 more than you need!
So what does the perfect amount of coverage look like? Let’s take a look at what homeowners’ insurance covers to help you figure that out:
- Fire Damage– Covers any loss or damage to your home, property, or personal belongings as a result of a fire.
- Property Damage– Protects you from things like burglaries, fires, high winds, storms, vandalism of your property. This includes your floor, doors, roof, and the structure of your house.
- Liability Coverage– Covers accidents that occur on your property that were your responsibility. For example, if someone slips on a wet spot in your kitchen and hits their head.
- Personal Belongings– Protects your personal belongings if they’re stolen, lost, or damaged. Includes things like electronics, clothing, jewelry, furniture, etc.
- Medical– Covers any injuries that occur to guests on your property. It helps pay for their medical bills so that you don’t have to.
2. Your Home
Makes sense, right? Just as your car affects your car insurance premiums, your property affects the premiums of your homeowners’ premiums.
There are many factors of your home that dictate the premiums you’re offered. Some pertain to the property, while others pertain to your lifestyle. See below for examples:
- The pets that you have: Dogs play a heavy role in your liability coverage. If the breed of your dog has a reputation for biting, it can be seen as a risk.
- The square footage of your home: The more space that you have, the more money that would be required to fix it if it were damaged.
- The location of your home: If your house is in a rougher neighborhood, expect it to play a factor in the premiums you’re offered.
- Structure of your house: If you have steel beams, you’re in luck. They’re less likely to be damaged during a fire, which will help you save on your monthly premiums.
- Your roof: The material, age, and quality of your roof can be seen as either a good thing or a risk. For example, asphalt roofs don’t tend to last as long as clay roofs.
3. Your Deductible
Too many homeowners shrug off or overlook the deductible in their homeowners’ insurance policies. Imagine the horror of experiencing unforeseen damage to your home, then finding out that you have to pay a larger deductible than you’d expected to.
Don’t overlook it. Take the time to consider what a reasonable deductible would be if you were in a pinch. How much do you have set aside in an emergency fund? Use that to gauge the deductible amount you’re willing to pay.
Keep in mind that the lower your deductible is, the higher it will raise your monthly premiums. If you’re able to set aside an emergency fund and pay a higher deductible, it can help you lower your premiums.
4. Remodel Projects
Why are you interested in remodeling projects? Because they increase the aesthetic and the value of your home.
However, many homeowners make the mistake of performing the remodeling project, but never adjusting their homeowners’ insurance accordingly. If an emergency happens, your home’s added value isn’t covered.
Any time that you make a renovation or are planning to, be sure to reach out to your homeowners’ insurance provider. This will raise your monthly premium a bit, but it will be well worth the investment!
5. Your Credit Score
As with any other form of insurance, homeowners’ insurance providers use your credit score to assess the level of risk. The lower your score is, the riskier it can be to provide a policy for you.
Therefore, the lower your score is, the higher you can expect your monthly premiums to be.
If you’re wanting to lower your premiums with your next policy, work on paying off your credit card balances, lowering your debt, and dispute any credit report mistakes. Those mistakes happen more often than you’d think!
Use These Factors That Affect Homeowners’ Insurance Premiums to Your Advantage
Now that you have seen several of the key factors that affect homeowners’ insurance premiums, be sure to use them to your advantage.
Be sure to read this article for information on how to get the best car insurance in Raleigh as well. You’ll be glad you did!
For more inquiries, please be sure to reach out via our contact us page and we will be happy to assist you further.
