Major Factors that Impact your Homeowners Insurance Rates

When looking at your homeowners insurance, there are many factors to look at regarding your rates. Buying homeowners insurance can be very frustrating, as well as very confusing, but you must stay focused, and know what you want as well as what you need. Keep in mind that insurance companies must determine your rates based on the risks of both you and your home. If you home’s risk is high, so will be your premiums. Some of the factors to look at are:

1) Where you live- If you live very close to a fire station, your premiums will be lower than that of others, who may live farther from a fire station. Also, if you live in a flood zone, that may not be covered under your homeowner’s insurance, and you may need to purchase this separately.

2) The size of your home- If you have a single family home, your rates will be lower than that of a home with a rental property or that of a duplex. This does not include how much land is included.

3) Home and Business- If you run a business from your home, your premiums will increase. You must have separate business insurance to cover this.

4) What is your homes value?- Make sure not to include the value of the land when you buy insurance, as this is not something you would have to replace. You should only include the value of your home, as this really is the only thing you will replace. (Not including personal property inside the home)

5) What was used in the construction of your home?- If your home was constructed out of fire retardant materials, such as brick or steel, your premiums will be lower than if it were constructed from wood. Also, if the home is older it will affect the rates as well, as its materials may need to be replaced or repaired.

6) Cost to rebuild- Knowing what it would cost to reconstruct your home in case it is lost, determines what your premiums will be. If it is an area with low construction rates, your premium will be lower than an area where it costs much more to rebuild a home.

7) Age, Sex and Marital Status- This is not discriminatory, keep in mind that these factors help determine your premiums based on statistics.

8) Your Credit Score- This score is a big part of your life, and when checking your score, the insurance company wants to know if you are paying your bills, and if you are responsible enough to pay your bills on time and in full. This helps the company determine how big a risk you are and this in turn affects how much you will pay for premiums.