How much you pay for your home insurance largely depends on a few factors. It is your home and you will take every step to protect it from harm’s end. But, when you are investing money you must know how your money will be used for the benefit for your home. You must be aware of how much you should invest in order that you can properly care for your home. You don’t want to spend unnecessarily and hence must have an idea of what are the factors that contribute to the premium you pay for home insurance. Take a look:
The location of your home
If your home is in a disaster prone zone, or if your locality is famous for thefts then your premiums will be higher compared to areas that are low-risk zones. The loss history in your area is used by underwriters to chalk out a premium plan for you.
The structure of your house and the construction
If you have a house made of wood, you will be more at risk of mould, or collapsing from windstorm and hence will have to pay more money. If your house is built of stronger materials you can pay lower premiums in comparison. Again, if you have installed any safety feature in your home your premium might become lower.
Type of policy that you buy
Broader policies are more expensive because they cover a lot of things. E.g. HO3 policy would be expensive when compared to HO1 since it is a broader form and HO1 is only the basic policy.
Cost of labor
The cost of construction is important because if your house needs to be rebuilt, this cost will come into play then.
Deductible
Deductible is the amount you pay out-of-pocket when there is any damage to your insured property. The greater deductible you opt to pay the lesser will be your insurance premium.
Clue report
CLUE Report or Comprehensive Loss Underwriting Exchange report is checked by the insurers to assess if you are suitable to insure or not. Your claims history will help them decide whether they will insure your home or not.
Your credit score
With a bad credit score you will have to pay higher premiums.
You can seek answers to insurance questions from your agent before buying any kind of policy. Make sure you understand everything that you are buying. It is your money after all and you must know where you are investing.
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