Knowledge is power, and when you learn about these factors and the premiums the insurance companies charge, you can work with these factors and lower your monthly payments.
In the insurance world, rates are always tied with risk. The more risk factors that are present, the higher your home insurance rates will be.
Here are the top 5 factors that determine your level of risk.
Location
Where your house is located is one of the biggest factors in determining your rate. Rates vary widely from state to state and city to city. For example, Florida home insurance is higher than most states because of the high risk of natural disasters.
Living in a high crime neighborhood will also increase your rates. Again, this goes back to risk factors, in a high crime area or along the coast, there is a much greater likelihood that your house will be damaged, vandalized, or stolen from.
Building Cost
Many insurers will look into the building costs in your neighborhood. They will calculates the cost if they would have to rebuild your house from scratch. The higher the building costs, the higher the rates.
Building Materials
Insurance companies will also consider how your home was constructed and what materials were used. If your house is built with brick or stone, you will usually see lower rates. This makes sense as brick houses are able to sustain strong hurricane force winds better than wood and are also more likely to hold up better in the case of a fire. If you live out West, you will see lower rates if your house is constructed using a metal frame, this type of construction hold up much better in the case of an earthquake.
Fire and Police
If you live an in area that has a paid fire department versus a volunteer fire department your rates will be lower. Other factors that are taken into consideration are how close you are to a fire hydrant and how close you are to the fire department. Your proximity to the police station can also have an impact on your rates.
Other Factors
If you have a swimming pool or hot tub, or even a trampoline on your property, your rates will be higher. Believe it or not, even the type of dog you own can impact your rates.
With so many factors that determine how much you will pay for home insurance it makes a lot of sense to shop around and get multiple home insurance quotes to make sure you are getting the best deal.
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