How Home Insurance Premiums Are Calculated: An Overview
Homeowners can save money on monthly insurance premiums by reviewing their policies with their insurance agents and deciding on matters they need to prioritize. Every individual or family has their requirements, which is why home insurance policies are commonly customized. Here is a look at the several factors that go into setting premiums and adjusting them over time.
Homeowners Insurance: The Basics
Homeowners’ insurance is not a legal requirement among homeowners, but mortgage companies generally require it. The coverage pays for damages to the home due to named perils such as storms, fire, or vandalism. In addition, it covers liability claims that arise when a guest is injured on your property. Wind and hail damage are the two most common homeowners claims.
Nonetheless, standard homeowners insurance policies only cover so much, as many homeowners need extra coverage in certain areas due to increased risks. Besides, it doesn’t cover earthquakes and floods, and you need separate coverage for damages caused by them.
Factors That Influence Your Insurance Premiums
Insurance premiums for standard homeowners policies are shaped by the state government and the overall levels of risk. Some states have costlier home insurance due to a history of hurricanes, such as Louisiana, Florida, and Texas. States with the lowest premiums include Oregon and Vermont. The neighborhood’s crime rate is another important factor for calculating premiums, along with property values and coverage add-ons.
Monthly Home Insurance Rates by Coverage Amount
The coverage amount of a homeowners insurance policy is another factor that affects monthly rates. Standard home policies have coverage amounts that range from under $50,000 to over $500,000. As a homeowner, it is up to you to determine how much coverage you need to protect your structure, personal possessions, and other assets. Coverage limits can be set for different variables as percentages of your dwelling coverage.
Lowering Your Monthly Insurance Payments
Various strategies exist for homeowners to lower their monthly insurance payments. First, you should review your policy and consider what coverage options need adjusting. Raising your deductible – the amount you pay upfront for a claim before the policy reimburses the rest – is the easiest way to lower your monthly premium. Another way is to ask your insurer about discounts they might be offering. For example, if you carry an auto insurance policy with the same insurer, ask if you can bundle the policies for a discount.
In some cases, you can lower rates based on proof that you’re proactively reducing risks. Investing in a video surveillance system with security cameras, for example, reduces the chances of a burglary. Another way to lower risk is to buy a fire extinguisher. You can also get a break in price if your home is near a fire hydrant or fire station. Other security investments that ensure low risks and reduce insurance costs include deadbolt locks and alarm systems.
You can also lower home insurance costs through remodeling and adding innovative technology. Making sure that your roof is in good shape is essential. At some point, every roof needs to be repaired or replaced, which leads to filing a home insurance claim. Annual roof inspections can ensure your roof has no leaks, which is one of the keys to long-term, low-cost home maintenance. Roof damage is expensive, and neglect makes it worse. So use proactive renovations to show your insurer you care about the durability of your roof.
Even though buying home insurance is a choice, it also fills a critical need to protect the value of your property and possessions. With the right coverage, you can rest assured that your valuables are adequately covered. Contact us at Little & Sons Insurance Services to learn more about getting the right homeowners insurance for your needs.