How much does homeowners insurance cost is a popular question. For most people, their home is their largest asset, and protecting that asset can be pricey. Homeowner's insurance can vary widely based on many rating factors, such as condition, location, size, features, furnishings, and your marital status and credit score.
The answer to the question of "how much does a homeowners insurance policy cost" is based on many factors, a few of which are listed below.
The short answer - it depends.
As technology progressed so did the rating factors. Software systems are getting more sophisticated, and historical data has allowed policy underwriters to more accurately calculate rates based value, location, and condition of the home, along with the extent of coverage, deductible, and the homeowner's credit and claims history.
Understanding How to Choose Coverage and How Much You Need
Home Insurance has three fundamental types of coverage that determine the amount of compensation you receive following a covered disaster.
Actual cash value (ACV) - Protects your structure and contents based on their current value, not to be confused with what you paid for them.
Replacement cost (RC) - Protects the structure and contents based on what they cost now up to the policy's value.
Guaranteed or extended replacement cost/value (GRCV) - Protects the structure and contents based on the present-day cost to replace and/or rebuild your property at a designated percentage above the policy limits.
The cost of the policy is also based on the dollar amount you insured the dwelling, liability coverage you agreed to, in addition to other factors.
Many individuals find they are underinsured when catastrophe strikes, and is especially true of individuals that maintain enough coverage to satisfy the mortgage company. Policyholders should understand that mortgage companies are only concerned with protecting their investment; your contents and additional property are not their concern.
The National Association of Insurance Commissioners' most recent data (from 2017 – 2018) reported increased premiums of 3.3% across the country. The report also revealed that homeowner's insurance premiums are higher in areas with greater population due to real estate values and construction costs.
Increased insurance rates is also the case for popular vacation and retirement areas, areas prone to natural disasters such as tornadoes, wildfires, earthquakes, and hurricanes
When researching homeowner's insurance in my area, it would be beneficial and save time if you have the following information handy:
The dollar amount and specific coverage are the most significant determinants of policy price; other factors come into play. Condition and age of the home (has it been reasonably maintained), materials used to build the home, and the age and condition of the roof.
Underwriters also consider:
Most states allow the credit history of a homeowner to factor into rates.
Proximity to a fire hydrant, police, and fire station can also positively impact your homeowner's insurance.
Your neighborhood and claims history in the community, along with the crime rate in your area, can impact your rates.
Additional endorsements to cover particular circumstances or personal property also impact rates.
When trying to find a cost-benefit balance, ensure your liability coverage is enough to protect your personal assets, in the event an accident and the injured party sues you. If you fail to carry enough liability insurance, courts can attach an award to your personal assets. If your assets are substantial, consider adding an umbrella policy, the cost is minimal, but the liability coverage can be significant.
A leading liability claim is dog bites – most homeowners insurance and liability policy coverage extends to your children and pets.
Shopping insurance in Lake Charles La can save money.
Considerations for Lowering Your Homeowners Insurance Rates
If premiums for your homeowner's insurance are coming in too high for your budget, consider the to lower your rates. Keep in mind, higher deductibles mean more out of pocket expense if an incident or accident happens.
Increasing your deductible. Increasing the amount of money you are willing to pay out-of-pocket before your coverage kicks in can lower your premiums. Increasing from $500 deductible to $1,000 deductible can decrease your premiums by as much as 25%.
If you are going to increase the deductible, you should have a savings account with the $1000 set aside in the event of an incident or accident.
By raising your deductible, it will also mean that you will need to absorb the costs of repairs you may have otherwise claimed. Claims such as repairing a broken window, or replacing flooring from a leaky pipe will likely cost less than or come in just above the cost of your deductible.
Insurance policies may also include different deductibles for distinct perils. For example, hurricane deductibles on homes along the coast are generally a percentage of the insured value of the home, where other peril deductibles like fire is most often a fixed dollar amount.
Adding security features and making certain repairs can also lower premiums. Types of additions and repairs that can lower your homeowner's insurance can include:
When renovating, consider using materials with a higher safety rating. Examples are steel framing and cement; while these items can cost more upfront, they are more cost-effective to insure due to their flame-resistant qualities.
A claims-free discount may be available if you have maintained insurance through the same company for years. Additional savings may be available if you carry multiple policies with the same insurer (think of bundling your auto and homeowners with the same provider).
Being prudent with your claims is another way to save money on your homeowner.
Your insurance is there to protect you from financial disasters; think carefully before filing a claim that is worth very little after paying your deductible. Your claims history has an impact on your insurance rating and can cause premiums to increase at renewal.
Don't treat your homeowner's insurance policy as a maintenance plan. Home insurance is for accidents or incidents that are unexpected, and you can't afford to pay for out of pocket.
Claims free individuals and households benefit from being a low-maintenance customer. The rewards are reflected in lower premiums. Owning your home outright can also lower rates with some underwriters.
When shopping for homeowners insurance in Lake Charles Louisiana, look for a reputable company with access to multiple insurance underwriters; this will allow you to fill out one quote form and your agent to do the shopping for you.
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