We hear it a lot! My friend has X insurance and is paying way less than me? And we get it, we naturally compare all things in life, My Iphone does this, well my Android does that. Its natural to compare things, but when it comes to home insurance you also have to take into consideration the factors that make your rate what it is.
Here are the main things driving your Home insurance premiums:
1. Coverage Amount: If your friends policy only provides $500,000 worth of coverage and your home requires $1,200,000 to rebuild, your rates are not going to be comparable, as your policy provides significantly more coverage.
2. Deductible: The higher the deductible, the lower the premium. You also likely do not want to submit a claim under $2.500 anyways, as the surcharge on your policy over the next 3 years are likely to outweigh your pay out amount. So up that deductible and reap the benefits of the savings. Save your insurance for when you really need it and pay those smaller losses out of pocket when you are able.
3. Location: This is one of the biggest reasons for a higher rate! We could take the same exact house and place one in the city next to a fire station and take the next one and put it in the mountains surrounded by woods and you are going to see a big difference in premium because the chance of loss simply are dramatically different.
4. Construction type: Frame Vs Masonry, Slab Vs Crawlspace Vs Basement, Wood, Brick, Stucco, the list goes on, but these all have different rating factors when it comes to homeowners insurance.
5. Home Condition/Age: A home built in the 1920's is going to be rated differently than a home built in the 2000's. Additionally, the upgrades to the roof, heating, plumbing and electrical make a BIG difference. If you have not updated or replaced those items on a home older than 20 years, you can expect it to affect your insurance.
6. Risk Factors: We all love a summer day watching the kids cannon ball into the pool, to hear our kids laughter when they jump on the trampoline and the way they fall asleep at the end of the night cuddled up with your family pitty, Tank! But unfortunately, things like pools, trampolines, and having certain breeds of dogs can play a part in an increased rate or even keep you from qualifying for certain carriers.
7. Past Losses: Remember when I said save your insurance for when you really need it, this is why. Carriers do pull your loss history and if they see that you have had many losses in the past you will be surcharged on your homeowners policy. This is why it is so important to have an insurance advisor vs just a call center insurance company. We can assess the loss with you and determine if it makes sense to file a claim
8. Discounts: There are so many ways discounts can affect the premium. Maybe your friend has all policies with one carrier, or has an occupation that qualifies him for a discount you don't. Make sure you ask your advisor to review all available discounts with you!
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