What kinds of things affect my Homeowners Insurance Premium?

First a carrier will do a "background check" to learn more about you. Some carriers can do this with as little information as your name and address. This pre-screening is done to determine your financial responsibility by taking a look at a person's past claim and loss history, and credit scores. Each of these factors can affect your insurance rates or your eligibility to purchase insurance through certain carriers.

Claims and Loss History - Your claims loss history will follow you where ever you apply for home insurance coverage. A high frequency of claims will raise a red flag and possibly your homeowners insurance costs. If you have been cancelled by another carrier for claims it may affect your ability to purchase future coverage. Claims are often affected by the size of deductible you carry, therefore the higher the deductible on your homeowners insurance policy, the lower your homeowners insurance premium will be because you are assuming a greater financial responsibility in the event of a loss, and by doing so are less likely to file excessive claims.

Deductibles – The deductible is the amount of money that the property owner agrees to be responsible for at the time of loss. Discounts are often given for carrying higher deductibles.

Insurance Credit Score - Your credit scoreand your ability to pay your bills on time is believed by some carriers to determine your likelihood of letting your insurance lapse and/or filing frequent claims. Once the level of your financial stability is established the carrier will look at the property to be insured.

Dwelling Coverage Amount - Your dwelling coverage amount will affect your homeowners insurance premium. If you have a home that can be replaced for $100,000, that premium will obviously be less than one that will cost $500,000 to replace. The replacement value of your home is very generally determined by the size or your home and quality of construction. Ask your insurance agent to do a replacement cost estimator to help you determine the insurable value of your home. A few variables that affect your replacement value are:

• Construction Type - How your home is built and the materials used in the construction of your home have an impact on your homeowners insurance premiums. "Stick built" is a frame construction which generally refers to properties with a wood frame vs. masonry (brick or block). If your home has a wooden frame with a masonry (brick) veneer, this would be less expensive than a wooden frame with wooden siding, because of the potential for loss from damages such as with a fire. In contrast modular or manufactured homes are not considered "stick built" and are typically more expensive and more difficult to get insurance for. So, it is wise to consider that good insurance may be difficult or expensive to obtain when purchasing a modular or manufactured home.

• The age of your home - You may receive a discount for new construction while conversely an older home may be considered a higher risk to insure because of the greater possibility of failure of materials/equipment used in an older home. Every carrier is different, but generally speaking, if your home is more than twenty years old, you may need to provide your insurance agent with proof of updates on your roof, electrical system, plumbing and heating/air systems. If you are buying an older home ask the previous owner for receipts for repairs made to any of the above named items, and if you plan on selling an older home save your receipts for repairs/upgrades and offer them to the new homeowner to help them obtain adequate insurance coverage.