How Much Does Home Insurance Cost?
When you apply for a home insurance policy many things will be taken into account to determine the price. Some of these issues you may be able to change for a better policy price, some cannot. It is important to understand what affects your home insurance cost before you purchase a policy. This way you will be able to make any changes necessary to receive the best price.
Dwelling Coverage. The amount of money it would take to rebuild your home, in your area, is what this coverage represents. The equation to determine this amount is to take the square footage of your home and multiply it against the cost per square foot of building a home in your area. This rate will differ from region to region. The replacement cost of your home in the event of a catastrophe will represent a significant part of your policy cost.
Extra and Separate Coverage. Home owners insurance also provides other coverage’s for the structure. Contents coverage, medical payment, liability coverage and selected endorsements will all change the cost of the policy. Content replacements are set on a certain percentage of the value of your home. This is a set standard of the industry and cannot be changed. Personal liability coverage can have the deductible adjust up or down. The adjustment in the deductible will determine the cost of this coverage. The same is true with medical payment coverage. You can adjust these two areas to adjust the cost. If you choose additional riders, such as extra protection for a certain personal item or storm damage coverage, you will see the cost reflected in your policy premium.
Construction of Home. The age and make up of your home
will also be a determining factor in your price. An older wood home, with the original electrical wiring throughout is a high risk property and the policy price will reflect. On the other side of the spectrum, a new home made of brick with current electrical standards will receive the exact same coverage at a lower price.
Safety features in the home can also have an effect of your policy. Many insurance companies will provide extra discounts to home owners that can prove:
• They use dead bolt locks on entrance way doors
• They have a burglar alarm installed. A monitored alarm that will also notify in the event of fire will bring an even greater discount.
• If the home is located within so many feet of the neighborhood fire hydrant
• If the fire department is located within a certain radius of your home
• If you do not own a dog that is listed on the dangerous pet list
Your Insurance Rating. Not many people realize that the insurance industry rates you much like the credit industry does. You will be assigned a number based on your insurance claims history and your financial credit score. The better your number, the better your policy price will be.
Home Area. If you live in a “risk” area you will pay a higher insurance premium. What is a high risk area? A place that is prone to specific catastrophic events. Coastline homes are a risk of hurricane damage, Californian homes, in certain areas, are at risk for earthquake. Certain areas of Rhode Island are plagued with electrical storms. Each of these areas presents a risk to the insurer and that risk will reflect in the premium.