Factors that Affect Home Insurance Premiums

• Credit history—In most cases, insurance companies will take your credit history into account when calculating your home insurance premium. Insurance companies will look at how good you are at making payments and how much debt you currently have. Typically, the better your credit score, the lower your insurance premium.
• Claims history—Any claims you’ve made at previous residences will be assessed by your insurance company when determining your premium. The type and frequency of the claims you’ve filed can lead to higher premiums.

Your Policy

The options you choose determine your premium as well as the level of protection you have in a claim situation. The following are policy items that have the greatest impact on the amount you pay:

• Type of coverage:
• Replacement cost pays to repair or replace your home or belongings without any deduction for depreciation.
• Extended replacement cost is a more expensive coverage option—but, it will pay to rebuild your home even if the replacement cost exceeds your policy limit. Because replacement costs are always changing, this is a valuable option and often the best protection choice even if the premium is a bit higher.
• Limit: Your policy limit is the maximum amount that your insurance will pay in the event of a covered loss.
• Deductible: Your deductible is the amount you pay for your insurance coverage to kick in to help cover a loss.
• Additional coverage: You may choose to purchase additional coverage for items or circumstances that may not be fully covered under a standard home insurance policy. Possible circumstances may include keeping more expensive items at your home (e.g. boats, fine art, or jewelry), or living in an area more susceptible to disasters that aren’t already covered under your existing policy.

Your Home

There are a few factors about your home that may affect your premiums:

• Home replacement cost value—The replacement cost value of your home can also influence the cost of your insurance. Typically, the greater the replacement cost of your home, the higher the premium will be.
• Age of property—Older buildings tend to have costlier premiums since the materials they’re built with may be more expensive and harder to replace. For example, if you have stained-glass windows in your home, that could cost more to replace than a standard window since stained-glass windows are far less common.
• Remodeling—Any improvements made to your home will lead to an increase in your premiums since renovations typically increase the value of your home—therefore increasing your home’s replacement costs. However, repairs made to your roof, electrical, or plumbing that increase safety or efficiency may allow you to receive discounts that can reduce your premiums. Always alert your broker about new home remodels to ensure they can be replaced if damaged or destroyed.

Location

If your home is located in a high-risk area, you will commonly pay more for your home insurance. Homes that are considered at a higher risk for damage or loss are those located near coastlines, farther away from response teams (fire or police departments), or are in areas that are more susceptible to natural disasters.

Home-based Businesses

If your home is being used for work purposes, you may need to purchase additional coverage. Most standard home insurance policies will provide some liability coverage and limited protection for business equipment you may keep at your home, but it may not be enough. To ensure you are sufficiently covered, you may choose to purchase additional coverage or add it to your home insurance policy.

Attractive Nuisances

Attractive nuisances are potentially dangerous objects that could attract people, including children, onto your property. The most common attractive nuisances are pools and trampolines—if you have either on your property, you may pay more for your insurance or it may limit the options of carriers willing to insure your home.

Dogs

Depending on your insurance policy, your dog may be covered under your home insurance policy if they are involved in a liability claim. But, some dog breeds that are marked “aggressive” may have limited coverage or none at all. Having certain breeds can result in standard carriers being unwilling to insure a home or canceling a policy. If you are considering getting a dog, talk to your agent in advance to understand if there are any impacts on your insurance coverage  

We’re Here to Help

It’s imperative to have a clear understanding of your policy and how it works to help you recover from a loss. It’s a good idea to review your policy periodically to ensure you have the protection you need. Never hesitate to Contact Murphy Insurance for additional guidance.