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<p class="has-black-color has-text-color has-large-font-size">In the United States the current average rate for homeowners insurance is $1,428 for $250,000 in dwelling coverage. Being familiar with the different factors that influence premiums for homeowners insurance can be useful when shopping for an insurance policy. It is also helpful to know about all of the options available to enhance a standard homeowners policy that could add to your premium. Bank rate’s insurance editorial team, which includes licensed agents, analyzed the factors that influence home insurance premiums and have provided some helpful tips to help guide you when deciding which policy is best suited to protect you financially against damage to your home and belongings.</p>
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<h2>Factors that impact your home insurance rate</h2>
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<p class="has-black-color has-text-color has-large-font-size">There are several factors that insurers may use to determine your risk profile as a homeowner. A risk profile simply conveys how likely you are to experience a covered peril and file a claim. If an insurer determines you live in an area where the chance of a claim is higher, then it will likely increase your home insurance rates. The following homeowners insurance cost factors may impact your premium:</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size">Location</h3>
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<p class="has-black-color has-text-color has-large-font-size">Your state&nbsp;and even your ZIP code may influence the amount you pay in home insurance premiums. If your house is located in an area with a history of perils, such as vandalism, theft or weather-related events, you may see a higher premium. However, location could have a positive impact, too. If you are located near a staffed fire station, for example, your home insurance premium could be slightly lower. Location may also be used to determine the replacement cost of your home since construction costs, including labor and materials, may vary depending on region.</p>
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<h3 class="has-extra-large-font-size">Dwelling coverage</h3>
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<p class="has-black-color has-text-color has-large-font-size">Dwelling coverage&nbsp;is the portion of your homeowners insurance policy designed to cover your home’s structure. Insurance companies have valuation tools that help calculate dwelling costs. The insurance agent – or online quoting tool – will ask you questions about your home to determine how much it might cost to rebuild your house. Be prepared to answer questions about the age of the home and appliance systems (HVAC, plumbing, etc.), the roof age and materials, the type of building materials used, the square footage and even the unique features of your home, such as dormers or architectural characteristics.</p>
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<h3 class="has-extra-large-font-size">Credit history</h3>
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<p class="has-black-color has-text-color has-large-font-size">In states where it is allowed, insurers can use a homeowner’s&nbsp;credit-based insurance score&nbsp;as a rating factor assessing the level of risk they are taking on. A higher credit-based insurance score could lead to being perceived as lower risk, and rates are often reduced accordingly. Statistically, homeowners with poor credit are more likely to file claims under their policy than homeowners who have good or excellent credit.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size">Claims history</h3>
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<p class="has-black-color has-text-color has-large-font-size">Insurance companies often take previous claims filed within a certain time frame into consideration when calculating your rate. When a homeowner files a claim, their&nbsp;homeowners insurance company&nbsp;generally assumes they are more likely to file future claims. Having a history of&nbsp;filing insurance claims, even small ones, might indicate an even greater future claims risk for the insurance company.</p>
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<p class="has-black-color has-text-color has-large-font-size">Insurers may assess your personal claims history at current and prior properties. What that means is that even if you’re insuring a new home, your prior claims history from other homes will be visible to insurance companies for five to seven years on your&nbsp;Comprehensive Loss Underwriting Exchange (CLUE) report&nbsp;and will likely affect your premium on your new house.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size">Marital status</h3>
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<p class="has-black-color has-text-color has-large-font-size">Whether you’re a&nbsp;first-time home buyer&nbsp;or have owned a home for many years, your marital status may impact your homeowners insurance rates. Insurers will typically charge lower rates to married couples because of the assumed lower risk.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size">Age of home</h3>
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<p class="has-black-color has-text-color has-large-font-size">If you live in an older home, you will likely pay a higher home insurance premium. The older the house, the more likely it is that aging materials could lead to damage to certain key aspects of your home, such as electrical or plumbing. Older homes may need to be brought up to code as part of the rebuilding process, so you may want to consider adding ordinance or law coverage as part of your homeowners insurance policy. This coverage extends to getting the home up to date with current laws or ordinances that were created after the home was built or last updated. If you make upgrades to the heating, electrical or plumbing systems, or any other relevant updates, notify your insurance agent in case your policy should reflect the changes.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size">Deductible</h3>
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<p class="has-black-color has-text-color has-large-font-size">A&nbsp;homeowners insurance deductible&nbsp;sets the amount you will pay out of pocket for a covered claim. Agreeing to a higher deductible may decrease your premium, but it could also cost you more out of pocket. Some insurers offer diminishing deductibles on your home policy. For example,&nbsp;American Family&nbsp;may give you up to an $100 credit toward your deductible for every year you go without filing a homeowners claim. This may lower your out-of-pocket cost if you do have to file a claim down the road.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">Surprising factors that impact your home insurance rate</h2>
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<p class="has-black-color has-text-color has-large-font-size">Though the factors above relating to a home’s construction, claims history and the insured’s credit-based insurance score may be significant, there are other factors considered in setting rates that may surprise you.</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li><strong>Type of home insurance policy:</strong>&nbsp;There are several different&nbsp;types of home insurance&nbsp;available, which differ in terms of benefits, perils covered, cost and kinds of homes that qualify for coverage. Talking with a licensed insurance agent may be useful to help you understand the different types of home insurance policy types and which may be right for you.</li><li><strong>Distance from water:</strong>&nbsp;“The closer a home is to the coast, the more likely it is to experience flooding or hurricane damage, and tends to increase the cost of insurance,” said Sean Harper of Kin Insurance. According to Harper, “Flood zones play a key role in whether or not you&nbsp;need flood insurance. If you have a federally-backed mortgage, like an&nbsp;FHA loan&nbsp;and your home is in a high-risk flood zone, you’re required to have flood insurance.”</li><li><strong>Distance from a fire station:&nbsp;</strong>Wherever you live, the premiums you pay for home insurance are likely to be impacted by the proximity of your home to a fire department and fire hydrant. The closer you are to a fire station and hydrant, the greater the likelihood a fire can be quickly extinguished and severe damage or complete destruction of your home averted. The insurance industry generally uses the Fire Suppression Rating Schedule (FSRS) from the&nbsp;Insurance Services Office (ISO)&nbsp;to determine your home’s fire risk.</li><li><strong>Dog breed:</strong>&nbsp;Having pets, especially certain&nbsp;dog breeds&nbsp;and exotic animals, may also impact your rates or even your eligibility with some companies. Harper explained, “Some companies will simply raise your rates to account for the increased ‘bite risk.’ Even if your dog isn’t a ‘restricted breed’, a bite history could also impact your rate or ability to get coverage,” said Harper. However, if you are disabled and have a service animal or emotional support animal with specialty training, discuss this with your provider to see if a lower cost or discount will apply.</li><li><strong>Attractive nuisances:</strong>&nbsp;If you have attractive nuisances, or items on your property that could be potentially dangerous and appealing, especially to children, such as&nbsp;pools&nbsp;or playground items like a&nbsp;trampoline, you will likely see higher homeowners insurance rates or eligibility restrictions. Many home insurers will not insure your property if you have a trampoline or diving board for your swimming pool.</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">This is just a snapshot of some of the more common things that affect your home insurance rates. There are many factors that may affect homeowners insurance premiums, including ones that might not be mentioned.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">Additional home insurance coverage options</h2>
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<p class="has-black-color has-text-color has-large-font-size">Standard homeowners insurance policies offer protection for the structure of your home, your personal belongings and liability. However, home insurance policies don’t cover everything. If you want to fill gaps in your coverage or&nbsp;tailor your policy to fit your specific needs, you might consider adding endorsements or additional policies.</p>
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<p class="has-black-color has-text-color has-large-font-size">For instance, if you keep valuable items at home, like fine art or jewelry, you might think about purchasing a&nbsp;scheduled personal property policy&nbsp;or adding the endorsement to your homeowners insurance policy to get higher coverage limits. These add-ons may raise your insurance costs, but can save you from significant out-of-pocket costs in the future if you experience a&nbsp;covered peril.</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li><strong>Flood insurance:</strong>&nbsp;Flood insurance&nbsp;is excluded from standard home insurance policies. Although one or two companies offer flood insurance as an endorsement, flood insurance usually comes in the form of a separate policy purchased from the National Flood Insurance Program (NFIP) or a private insurer. Even if you don’t live in a high-risk area for floods, you may still consider flood insurance. According to the&nbsp;Insurance Information Institute (Triple-I), 90 percent of all natural disasters in the U.S. involve flooding, and flood damage strikes frequently in low or moderate risk areas. Flood insurance is typically a requirement if you have a mortgage and your house is located in a flood plain.</li><li><strong>Umbrella policy:</strong>&nbsp;These policies are intended to supplement your personal liability coverage. Liability coverage helps pay for legal expenses and medical costs if someone is injured on your property or you are liable for damage to someone else’s property. If you decide that your liability coverage does not provide enough financial protection, an umbrella policy could help increase your coverage. An&nbsp;umbrella policy&nbsp;may make sense if you have a high net worth, have an attractive nuisance on your property, or if you regularly host parties at your home.</li><li><strong>Sewer backup policy:</strong>&nbsp;Sewer backup insurance&nbsp;is not automatically covered by a homeowners insurance policy. Having this added as an endorsement to your insurance policy will help protect you financially if you experience a sewer or water backup that damages your home or belongings.</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">There may be other options you want to add. You could speak with your insurance company and licensed insurance agent about optional coverages and additional policies to help create a robust insurance package.</p>
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<p class="has-black-color has-text-color has-large-font-size">To read the full article,&nbsp;<a href="https://www.bankrate.com/insurance/homeowners-insurance/factors-that-impact-home-insurance-rates/#factors-that-impact-your-home-insurance-rate">click here.</a></p>
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