These days insurance companies see home buying as a risk sharing partnership. So to make sure you find yourself in the higher protection class and be able to get the best offer to insure your future home, there are a few things to consider.
The following 5 factors could have a huge impact on what you can afford and what type of homeowners insurance policy you can expect.
1. The Home’s Location
Based on where you choose to live, the distance between you and the nearby fire hydrant, your local fire station, police station, or even water supply can have an affect on your premium rate. And, did you know that a fire station receives their own fire protection class rating which in turn can alter your premium? If you choose to live where there are higher risks for natural disasters like wildfires or tornadoes, a high crime area, or even where building costs are typically known to be high will also play a role.
2. The Home’s Age and Type of Construction
Older homes will typically require more updates which may not be considered in your insurance premium. In addition, what your house is made of makes a huge difference; for example, you can expect a lower premium for brick over wood.
3. Risk Factors Found on the Property
This refers to the homes out-of-date plumbing, the roof, whether or not there is a security system, a swimming pool, trampoline, or even owning certain types of dogs like Rottweilers or Pit Bulls can have an impact. The electrical system is the only thing that isn’t technically required to be replaced to qualify but it does need to be updated. So no old fuses folks. If any of these factors are over 25 years old you should be prepared to update or you can find yourself falling under that high-risk, expensive insurance group.
4. Your Credit Score
We all get a little nervous with this one but don’t let this one come as a surprise when you’re searching for a new home. It’s always best to strive to improve your credit score now rather than later. Be proactive. Pay your bills on time. Don’t charge so close to the limit amounts set by the credit card companies. And, whatever you do, try and limit the number of open credit card accounts you have.
5. The Insurance Company
Look into more than one insurance company to see if you are being offered the best rates and most comprehensive policy for your new home. It will be worth it in the long run. If you already have an insurance agent that you trust, consider combining both your homeowners and auto insurance policies together under the same company. There could also be a loyalty discount offered by some insurance companies that can run from 5-15% depending on how many years you’ve been with them. The amount of coverage and the deductible amount you agree to can affect your overall payments in the end.
Ask your agent if there are any discounts that will help minimize your homeowners insurance costs over the long run. For example, installing or updating the smoke alarms, home security systems, deadbolt locks, or even having fire extinguishers in the home. All, could equate to 5% off your total policy costs.
And, read through the fine print. You could be paying into a policy that covers things you don’t need. Here are a few important resources: go to www.consumeraction.gov/insurance.shtml for rate comparison information by state or to www.ambest.com and/or www.standardandpoor.com to check on your insurer’s financial rating.
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