Homeowner’s insurance is a non-negotiable. Not only does it protect you if your home is damaged, but it also includes liability insurance if someone is injured at your home. When evaluating the policy, insurance
companies consider multiple items to determine their risk—and your cost. Here are seven things that may affect the amount you pay.
1. Square Footage – First, the size of the home is considered. A larger home would likely cost more to replace if damage occurred. More space also means more furniture, fixtures, personal belongings, and other items that would be replaced in a claim.
2. Layout – The style of the home is another factor in determining replacement costs. A single-story home might have higher foundation and grading costs, whereas a two-story home would need alternative construction methods.
3. Construction Materials – The type of material used to build the structure is important. Wood roofing would cost more to insure against a fire claim, as would a home with expensive travertine floors.
4. Property Age – The assumption is that an older home might have more deterioration than a newer home and this is considered in the replacement cost.
5. Home Features – Homes with extra buildings or pools will be insured at a higher cost than properties without these amenities.
6. Neighborhood – Local crime rates are reviewed to determine the risk to property and personal items.
7. Credit Score – Finally, the insurance company will consider the homeowner’s credit score. Not only does this help them understand if they are at risk for non-payment, but serious credit issues might be a factor in how well a property is maintained.
Homeowner’s insurance is important to every homeowner. Not only is it required by lenders, but it also protects the homeowner against financial disaster in the event of theft, fire, severe weather, and more. Understanding how rates are determined can help you compare options and get the best policy for your home.