Knowledge is power, as the old saying goes. And the more you know about home insurance, the better you’ll be equipped to protect your home. With that in mind, in today’s post, we discuss some of the most important factors that affect the cost of home insurance.
What Factors Affect the Cost of Home Insurance?
As you probably know, insurance companies love data and analytics. And while there are many factors that affect the cost of home insurance (not to mention that they can vary from company to company), the list below highlights some of the most important.
- The price of your home
- Your home’s square footage
- Your home’s age and condition
- The likelihood of natural disasters
- Local crime rates
- Your credit history (except in states like California, Maryland, and Massachusetts)
The Price of Your Home
It’s simple math: the higher the cost of your home, the more it would cost to repair and replace it. That’s why the price of your home is one of the first variables an insurance company will look at to calculate your insurance premiums.
Your Home’s Square Footage
Again, this is a numbers game. A bigger home is subject to more risks, so it’s easy to see why square footage plays an important role when it comes to determining your home insurance rates.
Your Home’s Age and Condition
If your house is old or in poor condition, you will probably have to pay more to insure it. Older or unkept homes are more prone to damage, increasing the potential for insurance claims — and the cost of your insurance as well.
The Likelihood of Natural Disasters
Insurance companies like to look at the big picture, so external factors also are taken into account as part of the calculations when they figure out your insurance rates. This factor is particularly important in California, where homes are exposed to large-scale risks like earthquakes or wildfires.
To learn more about this topic, be sure to check our previous blog, “Earthquake Insurance In California: 4 Facts You Need to Know.”
Local Crime Rates
Home insurance policies help pay if your home is burglarized or vandalized. So it makes sense that local crime rates influence your insurance rates, even if you have never been a victim of these incidents.
Your Credit History
In some states, insurance companies are allowed to look at your credit report as part of the process of determining your home insurance rates.
However, It’s worth noting that a few states (including California, Maryland, and Massachusetts), have forbidden or limited this practice.
To learn more about home insurance, check out our previous blogs, “Homeowners Insurance: What Is Loss of Use Coverage?” and “Homeowners Insurance: “What Is Ordinance or Law Coverage?”
RF1 Insurance Services: Home Insurance in Southern California
Looking for home insurance you can rely on? At RF1 Insurance, we work with some of the world’s most trusted insurance companies, including Safeco, Guard, Stillwater, National General Premier, Aegis, and the California FAIR Plan.