Along with being a homeowner comes the need to get home insurance. Whether you’re in the process of buying your first home or you’re just switching insurance companies, you might be wondering what affects home insurance rates. Maybe you have a general idea of the average cost of home insurance in Georgia, but how do insurance companies come up with your premium? They don’t just pull a number out of thin air (though it may feel that way sometimes.) We’ll explain how home insurance premiums are calculated by giving a run-down of the factors that affect your rates.
1. Your home’s reconstruction value influences your premium.
If your home was completely destroyed by a fire, you would need enough insurance cover the cost of rebuilding it, including construction and clean-up costs. This is different than the market value of your home and the amount left on your mortgage. The materials your home is made of play a large part in determining your home’s reconstruction value and your insurance rates – the higher the reconstruction value of your home, the more insurance you need. And, of course, more insurance means more money.
2. Your claims history.
The more claims you’ve filed, the higher a risk you are to insure. Insurance companies tend to avoid risk where possible, so you’ll probably pay more in premium if you’ve had a few claims in the past few years.
3. Your credit score.
The main reason why your credit score impacts your home insurance premium is that it’s an indicator of risk. A high credit score shows that you’re a low risk while a poor credit score makes you a higher risk. Basically, that means the better your credit score, the better your home insurance premium.
4. The age of your home.
Newer, younger homes tend to have lower premiums because they’re made of updated materials and have safer wiring. Older homes may have unsafe electrical wiring that could cause a fire, and they may be made out of materials that aren’t easy to upgrade or replace.
5. Whether you have a pool or trampoline.
Pools and trampolines are called attractive nuisances because they’re irresistible and dangerous. Someone could get hurt while swimming in your pool or bouncing on your trampoline, which opens you up to more risk. So that means you could end up having higher premiums.
6. How close you are to a fire department.
If you’re close to a reliable fire department, they’ll be able to respond fast to a fire at your home. You may end up facing less damage to your home, and that means that you could get lower home insurance premiums.
7. If you have jewelry that requires extra insurance.
If you own expensive jewelry, artwork, or collectibles, you may not have enough coverage included in your policy to fully cover them. So, you’ll need to figure out how best to insure your jewelry, and that could mean adding a rider or endorsement (basically extra coverage) to your policy.
8. If you have a dog.
Yes, it’s true – your dog can affect your home insurance rates in a pretty big way. Insurance companies usually have a “dangerous dog list” that consists of breeds that are known for their aggression. The list includes breeds like pit bulls, Dobermans, Rottweilers, and even huskies. Dog bites are a major cause of liability-related home insurance claims, so if your dog has bitten someone or you have a high-risk breed you may face significantly higher premiums.
Yes, we know Fluffy is completely harmless. It’s just that the insurance company isn’t convinced.
9. How long you’ve been with your current insurance company.
Insurance companies really value loyalty. You may receive some sort of discount if you’ve been with them for years and years.
If you qualify for discounts on your home insurance, you could be looking at getting some pretty nifty savings on your premiums. For example, having a home security system could qualify you for a homeowners insurance discount, as could bundling your home insurance and your auto insurance. And you could get a discount if you go for a certain amount of time without having a claim.
At any rate, check and see what discounts could be available to you. They play a significant role in how much home insurance costs.
These are some of the most common factors used to determine home insurance premiums. Risks are a major part of calculating home insurance premiums; the lower a risk you are, the better your insurance rates could be.
If you think you’re paying too much for home insurance, we can help. Our agents are experts at saving people money on their insurance by helping them shop around for the best coverage at the best price. All you have to do to get started with your home insurance quotes is fill out our online form or give us a call today.