The cost of homeowners insurance is determined by factors other than the size of your home, its location, and the number of belongings you possess.
Some insurance companies just charge more for the same quality and quantity of insurance coverage as others, which is why it’s critical to shop around for coverage.
However, several unseen factors can have a significant influence on rates. Here are some surprising factors that influence your home insurance premiums.
1. Replacement Cost is King
Knowing your home’s market value is useful for setting a sales price, taking out a second mortgage, or disputing your property taxes. But it doesn’t really matter when it comes to homeowners insurance.
Insurance rates are based on the home’s replacement cost, or the amount it would cost to rebuild your home in the event of a total loss. It doesn’t consider the value of the property itself, or how big your front yard is — just the cost of construction materials and labor.
The market value of your home is usually higher than its replacement cost, so be certain you’re getting quoted on the latter, not the former.
2. Your Claim History
The quality of your home insurance also depends on your claims history.
The next time you renew your policy, you’ll have to answer a few questions about any past claims you’ve made. The higher the claim amount, the more likely it is that your rates will rise.
But don’t freak out if you had a small claim. The impact on your premium is more severe if you’ve made more than one claim in a short amount of time.
These numbers, called loss runs, are used to gauge your overall risk as a customer. If you’ve had a claim in the last couple of years, ask your agent if you’re sure that you have enough coverage, and be sure to explain your situation.
3. The Breed of Your Dog
Having a canine breed classified as “dangerous” by home insurance providers might potentially affect your house insurance prices. Although most dogs are adorable and friendly, certain breeds are statistically more prone than others to attack and bite humans or other dogs. According to the Insurance Information Institute, dog bite liability claims are an expensive concern for insurers, costing roughly $50,000 each claim as of 2020. (III). To mitigate their risk, many insurers may either restrict particular breeds from coverage or charge higher premiums if you have a German shepherd, pit bull, Rottweiler, or another dangerous breed.
4. A Home Improvement or Remodeling Project
Home improvement and remodeling projects can also influence your home insurance prices. Adding on to your house, remodeling your kitchen, repairing your roof, or constructing a pool all raise the replacement cost of your property, and more insurance on the home usually implies higher insurance premiums.
Adding a wood-burning fireplace or stove to your home, for example, may result in increased rates since your home is more likely to catch fire.
If you have recently remodeled your house or plan to do so, notify your insurer so that they can extend your dwelling coverage to cover the modifications.
5. Proximity to a Fire Station or Hydrant
Homeowners living in a neighborhood within a reasonable distance of a fire station or a fire hydrant may not have to pay as much as others with houses further away. The location of a fire station may result in lower rates for some homes.
6. Home-Based Businesses Need More Coverage
While your house insurance policy protects your personal items, it offers limited coverage for commercial property. Business liability is completely uninsured.
Suppose you operate a company out of your house. In that case, you’ll need additional coverage for your inventory and liabilities, which you can usually add to your homeowner’s insurance through a policy endorsement. That extra coverage might cost you a lot of money.
Conclusion
Knowing your home insurance rates and other factors that drive them can help you make the best decisions when it’s time to renew or switch.
When it comes to home insurance, there are many things you can do on your own to help your policy go smoothly. If you’re thinking about making a change, it’s worth finding out how those decisions will impact your coverage.
If you want to get the best coverage for your home, you’ll need to partner up with an insurance company you can trust. At Quesurance, we handle business insurance, home insurance, flood insurance, to name a few. Get in touch with us today!
