Faith and Finance

We all want to get the most bang for our buck, no matter what we’re buying. Below you’ll find some factors that can affect how much you’ll pay for homeowners insurance. Pay attention and you just might save some money on your home insurance policy!

Factors that Affect Your Home Insurance Premium

Get the facts. Start by gathering as much information as you can. Find out what kind of building materials were used in your home. What is the age of the wiring, plumbing and other systems? All of this can effect your home insurance premium. In parts of the country that are susceptible to earthquakes, a masonry home could be a liability, but in areas that are more prone to fires, a masonry home could be an asset.

Geography. Where you live effects your home insurance premium. You will pay more for homeowners insurance if you live in an area prone to natural disasters such as hurricanes. According to the Insurance Information Institute, the states paying the most insurance in recent years are Texas, Louisiana and Florida.

Your neighborhood can also affect your homeowners insurance policy. For example, being close to a fire department may lower your premium. Living in a high crime area will probably raise it.

Is Enough Enough? Many homeowners are under insured. They have not bought enough insurance to cover the replacement value of their home. Many are over insured because they calculated their insurance needs by including the value of the land. Make sure you’re adequately insured for the rates you pay.

Personal Articles Floater. You may need to add a personal articles floater to your standard homeowners insurance policy if you have valuable items that exceed your policy limits.

Protect Your Financial Assets. Increased liability coverage is especially important for pool owners. Other injurious items such as trampolines can drive your insurance up by 10% or more.

Consider Your Comfort Level. To some extent, you can determine your deductible level. A higher deductible can significantly lower your monthly premiums. However, you may feel more comfortable paying higher rates just in case disaster strikes. Your best bet is to choose the highest deductible you can afford. But remember, the downside to this is that smaller claims such as broken windows will have to be covered by you, the homeowner.

Embrace Preventive Maintenance. Making repeated claims for minor problems will raise your premium. Consider implementing a regular maintenance schedule for your home. Repairing small problems in a timely manner will help you avoid big losses down the road.

Review and Compare Policies Regularly. It’s a good idea to review your homeowners insurance policy regularly and compare it to other policies. As you review your existing policy, you should note any changes to the property that could lower your premium. For example, if you have paid off your mortgage or removed the trampoline and you can provide proof of these changes, your insurance company will lower your premium. Changes in your neighborhood can also reduce rates. For example, if a fire hall has been built next door to you, this will lower your premium.

Pay Off Your Mortgage. If you pay off your mortgage, you will likely see your home insurance premium drop because insurance companies figure that once you own a property outright you’ll take better care of it.

Allowable Discounts. When you start making calls to find the best home insurance coverage, you should know what kinds of discounts you are entitled to. Home security systems and dead bolts will also help you save on your insurance. Here’s a list of common discounts:

Impact-resistant roofs

Noncombustible roofs

Burglar, fire, and smoke alarm systems. These can lower your premiums by as much as 5%.

Installing smoke detectors in older homes can save you as much as 10% on your policy.

Fire extinguishers

Home security devices

Age of house (companies set their own standards)

Premises in good condition (companies set their own standards)

Home insured to full replacement cost

Good claims history for three years

Marking personal property with an identifying number (inspection required)

Other policies with same company

Senior citizens discount

Age and condition of home

The age and condition of your home will be considered. Companies cannot refuse to insure homes in poor conditions, but they can deny solely because of a home’s age or value.

Cost to Replace. Premiums are more expensive for homes with high replacement costs.

Construction Material. The materials a home is constructed of will effect your premium. For example, homes built primarily of brick are less expensive to insure than wood frame homes are.

Plan Ahead for Construction. If you are planning on adding to your home, consider that highly flammable materials such as wood, cost more to insure. If you choose cement or steel-frame construction, it will cost less to insure because it is less likely to be damaged by fire or adverse weather conditions.

Claims History. Companies will charge more if you have made claims in the past. Keep your deductible in mind. It may be less costly in the long run to make the repair yourself instead of filing a claim.

Your Credit Score. Companies may take into account your credit rating to determine your premium. However, a company cannot refuse you based solely on your credit rating.

Remove Potential Risks. Check your property for potential risks such as heavy tree limbs. Remove all potential risks.

Watch Out for Crime. Of course you cannot stop crime yourself, but you can make yourself less vulnerable. The following precautions can help lower your premium:

Have crime prevention officers inspect your home and give you advice on protection.

Start a Neighborhood Watch Program. The local police department can help.

Install a burglar alarm system.

Keep shrubs and trees trimmed around windows and entryways. Overgrown shrubbery is a good hiding place for vandals.

Keep the area around your home well lit.

Permanently mark personal property with an identifying number to aid in identification if the item is stolen and then recovered. A good time to do this is while you are doing your home inventory.

Maintain Your Home and Yard. Companies want to avoid losses from injuries or accidents. A cluttered yard and a peeling house could imply an unsafe home. If your house is peeling, consider repainting. Remove anything from your property that could cause harm. Fix any obvious signs of damage such as rotting boards and sagging screens. Replace damaged roofs. Keep your yard trim and neat.

Multiple Policy Discounts. Many insurance companies will give you a 10% discount if you also buy other insurance from them, such as auto or life.

Get to know these factors that can lower your homeowners insurance premiums – and then put them to work saving money for you!