The Cost of Insurance
Many things outside of your control affect the cost of your insurance. Some of these things are listed below.
Geographic loss experience. If an insurance company has lost a lot of money where you live, their rates go up regardless of how good your home is.
Type of construction. Some houses stand up to damage better than others. For example, brick does not burn, other types of outside covering will.
Type of fire protection. If you have a volunteer fire department instead of one with paid professionals, your rates will be higher.
The size of your house. The bigger the house, the more it will cost to replace.
Type of contents. Expensive furniture costs more to replace than older or used furniture.
The condition of the house. If an older home's electric wiring has been replaced and other improvements have been made, rates will go down.
Your credit score. Some insurance companies look at your credit record before giving you a policy. If you have a low credit score, you may have to pay more for your insurance.
Closeness of the nearest fire hydrant and fire station. If a home is close to a fire hydrant or a fire station, your rates may be lower.
There are also ways that you can be in control of the price you pay for homeowners insurance. Some of these ways are listed below.
Type of policy. An HO-3 policy costs more than an HO-1 because it covers more kinds of risk.
The amount of your deductible. Almost all homeowners insurance policies have deductibles. A deductible is the amount of money that you pay for every loss. The higher the deductible, the lower the cost of the policy.
Optional coverage. If you add coverage for things like jewelry or guns, the price of your insurance will go up.
Discounts. Many companies give discounts for your having things like smoke detectors or burglar alarms. Other discounts are given to non-smokers or retired people. If you get your car and homeowner's insurance from the same company, you can get a "multiple policy" discount.
The company you choose. Premiums vary by company. Shop around. You can use the "Homeowners Insurance Consumer Quote Guide" to help you ask for an insurance quote and compare the quotes you get.
If you have a mortgage and do not buy insurance, your lender will buy insurance for you. This is to protect the lender's collateral for the loan. This kind of insurance is called forced placement and is very expensive. If you cannot find an insurance company that will sell you a policy, many states have a "Fair Access to Insurance Requirements" plan to help you. Fair plan coverage can be limited in dollar terms and the kinds of coverage provided, and it may be expensive.
