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The Biggest Factors Affecting Your Home Insurance

Written by Posted On Wednesday, 03 October 2018 09:15

The cost of your home insurance can vary quite a bit. Prices can range from $300 to $1,000 a year on average, with wild variation between companies and regions. It’s difficult to figure out how much your home insurance will cost without taking an assessment of your house, what state you live in and even what street your house is located on. Here are some of the biggest factors that will affect the cost of your home insurance.

Location, location, location

Where your home is located is the first and most important factor in determining what your home insurance will cost. This doesn’t just mean your state, city or even zip code. This can mean things like whether you’re in a flood zone bordering a body of water that rises regularly, whether the foliage around you makes you a fire hazard, whether your neighborhood is at high risk of being burgled, and even whether there are easily accessible fire hydrants around. Some of the factors are in your hands, but others are more luck-of-the-draw.

Your zip code, the history of claims in your neighborhood and the history of claims on your own property will all factor into the final rate presented to you. Some homes are more prone to catastrophic weather events, especially if they’re closer to coastal zones or fault lines, which means expenses will rise accordingly.

The structure of your home

How securely your home is built will factor into the final cost of your home insurance as well. Homes that are older or made of less sturdy material will cost less to insure. Those with vacant land will have to consider paying vacant land insurance. This means that factors in a house that make it cheap may also make it come with expensive homeowners’ insurance. 

That’s why, when possible, it’s better to buy a better-built house in the first place, or make upgrades whenever possible. The possible long-term savings of improving the structure of your home can be significant.

However, larger homes will cost more money than smaller homes to insure. The more material there is to protect, the more it will cost the insure, naturally. Homes that are larger are also more likely to attract burglars, another factor that can raise the overall risk and cost of your homeowners insurance. If your home is made of flammable materials and isn’t securely insulated, that’s a risk that will raise the cost as well. In short, take a look at how well-built your home is. There are some things you can fix, and some that would more easily be addressed by moving.

Factors you wouldn’t have expected

There are some factors that are taken into consideration that you may not have expected. Some of these factors include: what pet species you have, your credit history, and what sort of equipment you bring into the house.

If you’ve got an exotic species that’s difficult to maintain, like a horse, or an animal known as high-risk, like a pitbull, your insurance agency might raise an eyebrow - and their rates. These animals are seen as increasing the risk of accidental damage or injury, so they’re going to be charged as such. Poor credit history is going to follow you in all insurance rates, so you should always work on trying to build your credit when possible.

And things like trampolines and pools, while fun additions to a backyard, also pose major liability hazards in the eyes of your insurance company, which means they’re going to ding you for owning them.

There are a surprising amount of factors that can be considered in calculating your rate. You’re never going to know what the final cost is before speaking to an agent. Don’t be afraid to shop around - you can get drastically different rates based on what different agencies take into consideration. 

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Patrick Rapa

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