Home insurance premiums vary from state to state and from company to company. Many factors are used to calculate your home insurance premiums, including the amount of coverage you have on your dwelling and personal property, the type of home you own, the location of your home, the deductible you choose, any extra coverages you add to the policy and any discounts you are eligible for.
Amount of Insurance
The amount of insurance you purchase plays a huge role in calculating your homeowner's insurance premium. A typical homeowner's policy is split into six sections: dwelling, other structures, personal property, loss of use, personal liability and medical payments. The more coverage you have, the higher your homeowner's insurance rate.
Dwelling Information
The year your home was built and the outside wall structure will influence your home's insurance rate. Solid brick homes are less expensive to insure because they are more resistant to fire and weather-related damages. Frame homes, because they are made of wood, are less resistant to fire, weather and termite damage, and more costly to insure.
Protection Class
Your homeowner's rate is also based on the protection class of your home. The Insurance Service Office establishes protection classes based on how far you are from a fire department and fire hydrant, and how well equipped the fire department is to deal with a major fire. Homes that are farther from a fire department and have less access to a usable water source have a higher protection class and cost more to insure.
Insurance Score
Many insurance companies incorporate an insurance score into their homeowner's rate. People commonly mistaken a credit score for an insurance score. While both are based on credit reports, an insurance score also considers the age of the driver, claim history and other variables. Insurance scores, according to the Federal Trade Commission, "are predictive of the number of claims consumers file and the total loss of those claims."
Deductibles
The deductible is the amount of money you must pay out of pocket before the insurance company will pay a claim. The higher the deductible, the more risk you assume and the lower your insurance premium.
Discounts
A multitude of discounts are offered through most homeowner's insurance agencies. Common discounts include multi-policy discount, age of dwelling discount, age of roof discount, non smoker discount and alarm discount. Contact your insurance agent to see what discounts you are eligible for.
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