So, you come home from work one day to find your annual homeowners insurance premium invoice waiting for you in your mailbox. As you open it, your eyes immediately focus on the “Amount Due” at the bottom of the page, but after you see the amount, you ask yourself how that amount is derived and how you could possibly reduce your annual premium.
There are a number of factors that go into the amount you pay for homeowners insurance.
Value of Home and Contents: The value the market places on your home plus the value you place on its contents dictates the amount of insurance coverage you have. Generally speaking, the higher the coverage the higher the premiums. While in many cases, there may be a correlation between the size of your house and the value, this is not always true.
Deductible Amount: The amount of money you chose to pay out of pocket for an event that would lead to insurance coverage (i.e. deductible) works inversely to the premium. In other words, if you chose a higher deductible, you will typically pay a lower premium.
Type of Construction and Age of Home: Houses that are constructed of brick are considered to be more durable to the weather and fire than frame houses and are generally rewarded with lower premiums. Also, the older your home is, the more potential there is for things to break or maintain. For example; it would be more expensive to repair a section of a slate roof than it would be to repair the same size section of an asphalt shingle roof.
Home’s Location: Your home’s location may impact your premium amount based on its proximity to certain risk factors. For example, if you have a fire hydrant in front of your house or have a fire station down the street, you may receive a discount on your premium. Conversely, if you live in an area that is conducive to extreme weather, such as floods, earthquakes, or hurricanes, you could expect to pay a “premium” on your premium.
Protective Features: Anti-fire and theft devices like smoke alarms, home security systems, along with steel doors, and deadlocks may all result in lower insurance premiums.
Your Credit: It is a common belief in the insurance Industry and statistically supported that the lower an individual’s credit score is, the likelihood of them filing insurance claims increases.
Recent Claims: If you had an unfortunate string of bad luck where you had to submit a number of homeowners insurance claims within the last few years or you chose to submit the claims instead of taking preventive action or fixing the problem yourself, your insurance company may partially transfer this increased risk to you in the form of increasing your premium.
If you believe your homeowners insurance premiums could be reduced by one or more of the factors described, please contact a BOLT insurance agency representative to discuss.