Factors that Affect the Cost of Homeowners Insurance

While it might not be the most exciting part of buying a new home, securing a proper insurance policy for your investment will go a long way toward providing peace of mind and helping you to enjoy the parts of homeownership that are fun! Insurance policies are typically personalized to a high degree, meaning the cost of your policy will depend on a number of factors unique to your region, personal history, home type and so on. Let’s explore some of the factors that may impact the cost of homeowners insurance for you:

Type of building materials used

“Dwelling coverage” is the portion of your insurance that covers the cost to completely rebuild your home in the event of an unfortunate incident. If your home was built using high-value or rare materials such as exotic woods/stones or copper pipes, your dwelling coverage rates will likely be higher than if more common and readily available materials were used.

Building costs in your area

In addition to material costs, the average cost of labor to rebuild part or all of your house will come into play when determining the price of your homeowners insurance. If you live in an area with lower median worker rates, the cost of your policy may reflect this.

Composition of your belongings

Simply stated, the more valuable your possessions are, the more expensive they will be to insure. If you have expensive furniture, electronics, art, etc. in your home, you will probably be paying a higher premium as it will be more costly for your insurance company to replace these valuable items in the event of loss or damage. If you have a fireproof safe for your more expensive items, or if you keep your Picasso behind a sturdy display case, your insurance provider may take that into consideration. You may also need separate coverage for high-value items.

Distance to first responders

In addition to potentially giving you a neighborhood Dalmatian to play with, having a fire station near your residence may affect the cost of homeowners insurance for you. If there is a fire at your house, the quicker a fire engine can get there to put it out, the better. So, if your home is near a firehouse, you will likely pay a lower insurance rate.

Geographic conditions

If you live in a part of the country where natural disasters such as earthquakes, tornadoes and hurricanes are more common, your insurance policy is likely to be more expensive than if you live in an area that isn’t near a fault line, ocean or Aunt Em’s farm. Residing near rivers or lakes that have been known to flood, active volcanoes, canyons (mudslides) or mountains (avalanches) and more will be taken into consideration by your insurance provider and will likely necessitate additional coverage.

Prior claims history

Just like with any other form of insurance, your individual homeownership history will come into play when pricing your policy. If you have filed numerous claims in the past, you can expect to pay a higher rate moving forward. Conversely, if your record is claim-free, you may very well be rewarded with a lower policy rate.

We hope this list of factors impacting the cost of homeowners insurance will be helpful as you progress along your homeownership journey. Be sure to consider our affiliate, American Home Insurance Agency, Inc. for all of your insurance needs. They’ve streamlined shopping for Richmond American buyers and know our homes’ specifications inside and out!