The cost of your homeowners coverage is largely determined by five factors:
Risks like extreme weather, crime rate, and distance to a fire station all can impact your rate. For example, you might pay more for waterfront property or if you’re located in an area prone to mud slides. Construction costs also vary by region, which is another factor that determines your homeowners rate.
Estimated replacement cost
This is different from the current tax assessment or market value of your home, and accounts for the actual cost to rebuild the structure of your home. For example, if your home was destroyed in a storm, how much would it cost to rebuild it? That amount is the replacement value. Not only are materials and labor considered, but inflation and availability of building materials.
Age and condition
This is determined based on very specific details like building materials, age of the roof, and the furnace’s condition. For older homes, we also factor in whether the building materials are still available and their current market price.
Having dead bolt locks, a burglar alarm, smoke detectors, and other home safety features will all help you stay safe and lower the cost of your home insurance policy.
In short, the lower your deductible (the initial amount you pay out-of-pocket before coverage kicks in), the higher your premium (the total amount that you pay for an insurance policy).