All homeowners need to purchase home insurance in order to feel secure in the belief that you are protected to some degree against even the smallest catastrophe. I want to show you many of the factors that affect the determination of what you pay for that insurance.
The first factor is where you live. Living in the city and closer to a branch of the fire department is infinitely better than living in a rural area where water from hydrants is in short supply once the volunteer fire department finally does get to your door. Going hand in hand with this is the construction materials used in your home.
Brick or stone built homes are much better for insurance rates than are wood framed homes. They are more resistant to flames though they are not fireproof. The use of any type of flame retardant materials will help to keep the monthly premiums down.
The value of the house is considered by the insurance companies because the more it costs to replace in the event of a catastrophe, the higher your premiums. A single family home will get lower premiums than a multi-family dwelling and if you want to keep the premium low, do not live above any type of business. This will definitely increase your premiums.
Insurance companies also consider the contents of the home in your premium. The contents replacement is about fifty percent of your house value, so if your possessions are worth more than that calculation, added insurance to cover those amounts will increase your bill.
When it comes to your liability for losses to others, through accident or crime, it is worthwhile to increase your homeowners insurance coverage for your own protection. This will increase your insurance premium but increasing liability limits might help you keep your home.
Additional Living Expense limits are usually included with your homeowners policy. These ALE’s are simply coverage for reimbursements of expenses incurred after a catastrophe has happened to your home. For example, this would cover the motel bill and living expenses in case you had to relocate temporarily for repairs or rebuilding of your home after a fire. Typically twenty percent of your coverage limit, you could increase this amount which will also increase your premium.
If you have a lot of claims on your insurance, the premium will go up so consider covering the cost of any repairs that don’t really have to be reported to your insurance company. If the damage or loss is major, then the insurance company should be notified.
If you keep a high deductible; the amount you are willing to pay out of pocket before the insurance company coverage kicks in, your premiums will be lower. Consider keeping your deductible as high as you can and then open a savings account that contains your insurance deductible so it won’t be an immediate burden in case something untoward happens.
Many insurance companies offer discounts that might lower premiums such as having homeowners and auto insurance from the same company, having safety features like deadbolt locks, alarm systems, sprinkler systems for fire prevention and having smoke detectors. Being over 55-60 years of age can get you a discount. Affiliation with some professional groups can get you a discount. You can also get a discount for staying with your insurance company for a long period of time.
So the next time you are in the market for a homeowners insurance policy, do your research and ask the questions that might keep you from paying extra on your insurance premiums.