Being aware of how each factor affects your overall home insurance rate is one of the best ways to make sure you get the best coverage at the lowest cost.
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Home insurance rate factors
A number of factors may affect your annual home insurance rate. These factors relate to more than your house. Personal information such as your claim and credit histories play into how high or low your quote is, too.
When calculating your home insurance rate, use the information below to get an idea of how each factor may affect your premium.
Dwelling insurance covers the structure of your home against covered perils. The amount of coverage you need can have a big impact on your home insurance rate. The amount of dwelling insurance you need is based on the replacement cost of your roof, walls and other parts of the physical structure of your home. Your dwelling insurance limit is typically used to calculate base limits for other parts of your policy. The table below shows how increasing your dwelling coverage can increase your home insurance rate.
|Dwelling coverage amount
|Average annual rate
|Note: Average rates are based on non-binding estimates provided by Quadrant Information Services. States used for averages include Arizona, Georgia, Florida, Texas and Illinois. Your rates may vary.
Personal property insurance is also included in a standard home insurance policy. This portion of your home insurance covers your belongings, such as clothing and furniture. You can choose the amount of personal property coverage you want, which affects your final rate.
You can choose your policy's personal liability limit, too. This coverage protects you if someone is injured on your property or if you're held liable for property damage caused by you or your family members.
Simply put, higher home insurance deductibles usually mean lower premiums. The most common deductible amounts that home insurance companies offer are $500 or $1,000. Of those, the $1,000 deductible tends to be the most popular.
Quality and age of the home
The building materials used and the age of your house can create variables in home insurance rates. Brick homes, for example, may result in lower premiums than houses made of wood due to lower fire risk. If you have an older home built out of materials that are hard to come by today, this can result in higher rates as well. According to the National Association of Home Builders, material costs have gone up in recent years, which also leads to higher premiums.
Your roof can affect your rates, too. Some roofing materials are better than others in the eyes of home insurers, based on their risk factors and life spans. The roof is one of the most important parts of your home, as it is the shield for the rest of the house. An old, unmaintained roof can result in higher rates.
Location of the house
If your home is in an area with a track record for natural disasters, this can raise your rates. Regions with a lot of disasters or severe weather, like tornadoes and hurricanes, are at high risk.
Your home's location in relation to emergency services can have an impact on your home insurance rates, too. This includes your home's distance from the local fire department, and even its distance from a fire hydrant.
The crime rate in your neighborhood may affect your home insurance costs as well. If you live somewhere with high rates of burglary and vandalism, that may boost your home insurance rate.
Your insurance claim history
How many claims you've filed in the past may affect your risk status, and therefore your home insurance rate. All home insurance claims are tracked by the Comprehensive Loss Underwriting Exchange (CLUE) when you file them. Claims stay on your CLUE report for up to seven years.
CLUE reports include information about the frequency of claims, the type of loss and the payout amounts. If you want to get an accurate look at your claim history, you can request a copy through LexisNexis.
Your credit history
While some states, including California, Maryland and Massachusetts, have limited or made it illegal to charge home insurance customers more based on their credit scores, it can happen in other states. Any steps you take to boost your credit score may have a positive effect on your rates.
The table below shows how credit ratings can influence your home insurance rates:
|Average annual rate: good credit
|Average annual rate: poor credit
|Note: Average rates are based on non-binding estimates provided by Quadrant Information Services. States used for averages include Arizona, Georgia, Texas, Utah and Illinois. Your rates may vary.
Home insurance companies consider attractive nuisances such as swimming pools, hot tubs and trampolines high-risk insurance situations. They're called "attractive nuisances" because they can entice children onto your property, where they can be injured. This may lead to an increase in your home insurance rates. If a trip to the hospital occurs because someone got into your pool or on your trampoline while you're gone, you can still be held liable. Personal liability coverage, which is included in a standard home insurance policy, can cover you if you're held liable for an injury.
Insurers may consider dogs a risk. If a dog bites someone, the dog owner may be held liable. This risk tends to result in higher rates or even non-coverage if you have a certain dog breed. Personal liability coverage can also cover you if you're held liable for an injury caused by your dog.
Home security and fire prevention measures
If you take steps to reduce the likelihood of theft or fire, your home insurer may offer you a discount. Installing home security systems, such as burglar alarms or barred windows, tends to bring down rates. The same stands for installing sprinkler systems or carbon monoxide detectors.
Your home insurance rate will likely increase if you add optional coverages to your policy. Many home insurance companies offer riders or endorsements, which can increase coverage limits or add protection. Home insurance companies may also offer water backup coverage, which protects your home against water damage caused by your drain backing up or your sump pump overflowing.
How can I lower my home insurance rate?
There are many ways you can lower your home insurance rate. Home insurance companies offer a wide range of discounts to help homeowners save money. These discounts include a multi-policy discount, a loyalty discount, a new home discount and more.
You can also lower your insurance rate by making improvements to your home, such as replacing an old roof. Getting quotes from multiple home insurance providers can also save you money. This can help you find out if you're overpaying for home insurance.
Average rates were compiled from rates in all 50 states. The following coverages were used:
- $275,000 dwelling
- $27,500 other structures
- $137,500 personal property
- $55,000 loss of use
- $100,000 liability
- $5,000 medical payments
- $1,000 deductible
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