Webb Insurance Group understands the difficulties of being a homeowner and having to navigate what insurance premiums are and how much they’re going to cost you in the long run. At Webb Insurance Group, our goal is to help make understanding all of those intricacies a little easier by breaking down the 9 factors that will increase your homeowner insurance premiums.
A mistake homeowners usually made when purchasing insurance is under-insuring your home’s value. If you don’t have enough coverage to protect your home from being destroyed or damaged, you’ll likely suffer from a great financial burden. Instead, consider the replacement cost of your home, or the amount of money necessary to build the exact same home in the same location. This is different from your home’s market value, so we suggest getting your home appraised first before purchasing insurance.
1. If you have a wood-burning stove or are considering purchasing one, although they can help reduce the cost of your energy bill and provide an atmospheric feel to your home, it will likely increase the cost of your homeowner insurance premiums. To combat this, Webb Insurance Group recommends you install multiple fire alarm systems, one close to the stove and a few more throughout your home. In addition, keep fire extinguishers on hand in case of emergencies.
2. When looking to remodel your home, whether it’s your kitchen, bathroom, or anything else, we know the cost for this quickly adds up. Webb Insurance Group recommends keeping your insurance agent aware of any home improvements as it will likely increase your premiums.
3. Your insurance score plays a large factor in determining the cost of your homeowner insurance premiums and even securing a policy in the first place. Similar to your credit score, those with low insurance scores are typically seen as a financial risk to insurers. To keep your score high, Webb Insurance Group recommends avoiding having debt in default, having a modest credit card balance but be sure to pay them in full, and make sure there are no tax liens, court judgments, or bankruptcies on your record.
4. How old your home is and how it was constructed, or even previous claims filed on the home, have a large influence on your insurance rates. The following breakdown can help you identify what kind of premiums you’ll be likely to pay depending on the age of your home:
- 30-year-old home — 1% increase
- 35-year-old home — 2%
- 40-year-old home — 2%
- 45-year-old home — 3%
- 50-year-old home — 3%
The cost of repairing anything in your home, such as replacing bad plumbing or redoing hardwood floors can all be signs of higher premiums. Similar to what was mentioned previously on home improvements or renovations, you’ll always want to address this with your insurance agent.
5. Having a swimming pool or hot tub can definitely elevate the feel and space of your home, but they will also increase your premiums since you will need additional liability coverage if someone is injured. The liability protection values range, but on average, having one or more of these features will only be a minor increase to your rates.
6. One thing not often thought about is the condition of your home’s roof. New or newly redone roofs will typically have a lower premium plan, while older homes will pay more. If you plan on redoing your old roof, contact your insurance agent to make sure you’re covered and saving money where you can. And remember, it’s up to you to make sure your roof is in good condition as some insurance groups could threaten to drop you if your roof isn’t in good condition and has leaks or other signs of wear.
7. Being close to the coast or a large body of water definitely provides nice scenery for your home, but it will also increase your premiums. It is likely you will have a separate deductible for hurricanes, other windstorms, flash flooding, etc. Webb Insurance Group recommends you purchase separate flood insurance even if your home isn’t considered high-risk and you live near water.
8. Similar to your insurance score, your credit history is used by insurance groups to create your homeowner’s insurance premium. Each company has its own formula, but it is different from your credit score. Below is a breakdown of what is typically used to calculate your insurance score:
- Payment history — 40%: How well you have made payments on your outstanding debt in the past.
- Outstanding debt — 30%: How much debt you currently have.
- Credit history length –15%: How long you have had a line of credit.
- Pursuit of new credit — 10%: How much you’ve recently applied for new credit.
- Credit mix — 5%: The types of credit you have (credit card, mortgage, auto loans, etc.)
9. Lastly, your previous insurance claims can also play a role in determining your premiums. In short, insurance groups will look at your past claims and determine the likelihood for you to make another claim at your new residence. A few examples of the most common claims made are filing a second file claim (44%), a second liability claim (39%), a second theft claim (38%), and a second water claim (33%).
Webb Insurance Group wants you to know all of the most important information about how your homeowner’s insurance premium can be affected. If you have more questions regarding this topic or want to get a quote, contact us today or visit our website here to learn more about homeowner’s insurance.