An important part of any good financial plan is to have a goal for moving forward, and also to have a good defensive financial plan. Of course, insurance is a key component in financial defense. Most importantly, I think that insurance is biblical.
Like any sort of shopping, when buying insurance you are looking to get the best value for your dollar. As such, it is important for you to know what factors affect your rates and how to be sure that you are not missing out on important discounts.
1. Breeds of Dogs – Rottweilers, Doberman Pinschers, Pit Bulls
If you have certain ‘dangerous’ breeds of dogs, your insurance company should know about it, or you might not be covered in a claim that involves the dogs. Of course, the insurance company could increase your rates or exclude anything related to the dogs.
2. Swimming Pool
When people do a cost analysis of putting in a pool, they often forget to include the insurance impact. If you are looking at buying a house or adding on a pool, call your insurance company and see how the pool will affect your rates.
I suspect you’re starting to notice a theme here – items that are the source of frequent accidents are not popular with insurance companies. However, if you own a trampoline your insurance company should know about it or it might become an issue if you file a claim in the future.
4. Distance from fire station
Though you likely would not move because of this factor, it might be a reason to buy one house over the other. Homes that are closer to fire stations can see a lower premium than homes that are a long way from fire stations.
5. Credit Rating
Your credit score does matter when it comes to house insurance rates. Hey, I’m one of these folks that thinks that is a little ridiculous, but what can you do? When insurance companies start noticing statistical trends, they change the price accordingly. Statistically, those with lower credit scores make more claims, so the higher your credit score, the lower your premiums.
7 Standard Items that Affect House Insurance Rates
One of the simplest ways to reduce your insurance cost is by increasing your deductible. Of course, you need to find the right amount because you do need money on hand to cover an increased deductible.
If you have recently changed or upgraded your home security, you should let your insurance company know. The better your security, the lower your rates.
3. Coverage Amount
This is another no brainer, but important nonetheless. The more house you insure, the more you’ll pay. This, of course, becomes an important factor when house shopping and deciding how much house you can afford. Be aware that you want to have enough coverage to pay for a replacement house. The cost of housing increases dramatically, so you might want to consider being over insured instead of under insured. As an alternative, you can buy a policy that covers a replacement house, not a set dollar amount.
Most people spend the most time on this point – shopping around looking for the company with the best rates. Since companies have different policies regarding all of these factors, you do need to find the one that has the best policies regarding your specific needs.
5. Company Policy Conditions, Riders, and Exclusions
Related to #4, different companies will be willing to cover you in different ways. When comparing the cost of homeowners insurance, you should review all of the policy conditions, riders, and exclusions. I know it will be a boring read, but it is also very important.
6. House structure and age
The age and style of your home affects the rates. In some cases, a minor home renovation could actually result in insurance savings.
7. Company Discounts
Just like different companies have different exclusions, they also offer different discounts. Here is a list of some discounts your insurance company may offer:
- Multiple policy
What other factors do you know of that can affect your homeowners insurance rates?
Photo by ansik.