Your home is your most valuable asset and you can’t afford to lose it, so don’t skimp on home insurance. Unlike auto insurance, it’s not illegal to own a home without home insurance, but if your home is financed in any way by a lender, you must have insurance that covers at least the building.
Home insurance is generally divided into two main categories: Building and Household. Some people take the risk of not insuring their furniture, but they probably never calculated how much it would cost to replace everything they own.
Others are less concerned about the amount of liability insurance included in their homeowners policy. For me, it’s a big risk. If someone has an accident in your home, they will call in your homeowners insurance. If you’re not insured, they could seek damages from you!
Coverage through home insurance
Home insurance covers the cost of rebuilding your home or other buildings in close proximity to your home (such as a garage or vacation home) in the event of a fire or other disaster. You must ensure that all costs associated with clearing the land and rebuilding your home are covered by the insurance. Always check the fine print of your policy to be absolutely sure that home insurance does not cover damage caused by natural disasters such as floods or earthquakes.
Flood insurance can be purchased separately through the homeowner’s insurance company, but the policy is covered by the Federal Flood Insurance Scheme.
Home insurance covers everything in the homes, including carpets, drapes, clothing, and furniture (except building components). Generally, homes insurance also covers loss or theft of cash or assets, as well as loss or damage to personal items outside the homes. It is best to take a complete inventory of your belongings, as it is easy to underestimate the amount of household insurance you need.
Factors That Affect Home Insurance Premiums
The value of your home is just one of the many factors insurers consider when calculating insurance premiums. Here are the 10 most common factors that affect insurance premiums.
1. The age and condition of your home
Newer homes are often less expensive to insure than older homes because they are in better condition. The condition of the roof, deck, porch, plumbing, electrical wiring, and air conditioning can affect insurance premiums, as can the overall structure of the home. For example, brick and stone homes are generally more fire and wind resistant than wood homes, and therefore have lower insurance premiums. The larger the home, the higher the premiums may also be.
2. Credit history
Statistically, homeowners with good credit ratings have fewer claims than homeowners with poor credit ratings, so homeowners with good credit ratings can reduce the cost of their home insurance.
3. Liability insurance
The level of liability coverage in home insurance also affects premiums. Liability insurance is an important part of insurance because it can protect your property if you are sued. Higher liability limits mean higher premiums but can protect you from frequent lawsuits and provide some security.
A higher deductible reduces the risk to the insurer, so you can usually expect lower premiums. Ask yourself how much you could save by raising your deductible, which can be as high as 25-30%.
5. Claims history
Homeowners who report claims frequently pay higher insurance premiums for household insurance. For minor, low-cost damage, you can avoid higher costs by paying out of pocket.
The cost of insurance may increase if the property is at risk of natural disasters such as tornadoes, floods, or wildfires, or if it is located in an area with a high crime rate or high construction costs.
7. Security factor
The security of your home is not only important to protect your family. Security features such as smoke detectors, carbon monoxide detectors, burglar alarms, door locks, and fireproof building materials can lower homeowners insurance premiums in Long Beach.
Properties with risk factors such as guest houses, pools, trampolines, and even certain breeds of dogs are subject to higher insurance premiums.
Insured with the same insurer for a long period of time, you can reduce your premiums. Often called a “loyalty discount.
10. Bundled insurance
If you buy your home and auto insurance from the same provider, you typically save 10-15%.
These are just a few of the many factors insurance companies consider when insuring your homes. Pay attention to whether there are any discounts available and how changes in your circumstances may affect your premium.
Lily Poole is a Property Insurance officer by profession. She is pretty well experienced in the Homeowners Insurance and accounting field and has an impressive profile in the training and development industry.