Home insurance premiums are often scarily high. But most home owners do not know what makes them pay so much as premium, or what they can do to lower this amount. Let’s take a look at some of the factors that determine what you’ll pay for home insurance, so that you can think up ways to cut down on them.
Some components that make up your home insurance premium are impossible to change. Where you live impacts the rate you’ll be charged for insurance. The type of home or building has an influence on the premium rates you will be charged. But there are other factors which can be modified, or that you can benefit from.
1. How Is Your Home Constructed?
The nature of your building’s construction and the material used to do it have an effect on your home insurance rates. That is because the stronger and higher quality your building material, the more resistant it will be to elements of nature. Heavy winds, torrential rain and dreadful snowstorms may not affect your well-constructed home very much. But poorly constructed buildings will be severely damaged under such circumstances.
Brick homes usually cost less to insure. Wooden and stick frame constructions are costlier to insure. This is because stone buildings are less prone to damage than wooden structures.
2. How Old Is Your Building?
As your building ages, your insurance premiums will go up. This is because wear and tear weakens the structure, and the chance of damages goes up as the years pass. Newer homes, in contrast, are not expected to need repairs often and may even qualify for a discount on home insurance premiums.
3. Where Is Your Home Located?
Homes that are in urban areas, especially in top tier cities, will cost more to insure. This is in keeping with the overall higher cost of living in these areas. Additional premiums may apply for other reasons, such as the risk of burglaries and vandalism in certain areas.
If your home is located close to the sea, then the danger of salt water induced damage is higher. This may reflect in the rates you will be charged for home insurance. Proximity to a fire hydrant or fire station could lower your premium because of the lower risk perception from fire injury.
4. What Is Your Deductible and Coverage?
Every home insurance policy differs in deductibles offered. Depending upon how much you have opted to pay in case of a claim before the insurance company kicks in to cover the rest, you will be charged a varying premium. For instance, if your deductible is $300, you must expect to pay a higher premium than someone with a $500 deductible. This means that while you will pay less in case of a claim, this comes at the cost of an additional premium payment every year.
In similar fashion, your coverage will govern the rate you are charged for home insurance. Homes in an expensive locality with higher value per square foot will require a higher dollar amount for coverage, with a proportionately higher premium.
5. Do You Need Additional Endorsements?
When you buy extra endorsements on your home insurance, you will pay more by way of premiums, but enjoy more extensive coverage which will protect you better in the event of any damage. These additions include protection of descriptions, refrigerated property, and even landscape protection.
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