When shopping for homeowners insurance, you may be wondering how the insurance company determines your rate. Many factors could affect your home insurance premium. Here are some of the factors insurance companies consider when calculating your premium:
The location of your home
Your home address can significantly impact the cost of your home insurance. This is because insurance companies use your postal code to identify the frequency and type of claims made in your neighborhood to determine how possible you are to file a claim. So, for instance, if you live in an area where flooding always occurs, your home insurance premium could cost you more than if you live where flooding occurs less frequently.
The age of your home
As your home ages, you’re more likely to experience issues like older cracked foundations and leaky roofs, which could increase your odds of filing a claim for damage caused by fire or water. As a result, homeowners with new houses often pay lower premiums, while homeowners with old homes tend to pay high premiums.
Your deductible amount
When buying a home insurance policy, you can choose between higher or lower deductibles on your policy. Your insurance premium will decrease if you agree to a higher deductible amount.
Your credit history
Insurance companies always check their customer’s credit history to know the risk they are accepting. A good credit score could mean lower risk and a reduced rate. On the other hand, poor credit could mean you’re more likely to file a claim and less likely to pay premiums on time, which could increase your rate.
Other factors that could affect your home insurance rates include square footage, roof build, pets, neighborhood crime rate, marital status, and many more. So, take time to analyze your rate before deciding.
