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Introduction Home insurance policies are necessary to protect a family’s most valuable asset: their home. Most consumers are aware of factors that are considered, like location, the value of home, and claims history. However, there are some factors that impact the cost of home insurance most people are not aware of that can cause home insurance rates to rise or fall. These are ten such factors that homeowners could make use of to save money on home insurance policies. Informed decisions and the ability to manage adequately home insurance premiums requires understanding the impact unknown factors have on home insurance premiums. Main Point #1 Credit Score People do not think that their personal credit scores can have an impact on their home insurance rate, but low credit scores cause premiums to go up. Consumers know that they will get a higher insurance rate if their credit scores suggest that they are a higher risk to an insurer. However, the impact of credit score can be quite high. Main Point #2 A home’s age and condition In terms of the age and condition of the home, newer homes cost less to insure. Insurance costs less because everything in the house is less dated. Older homes like those from 1970 or earlier need to have their plumbing and electrical systems updated to the present code. These homes are also more susceptible to damages from more catastrophic events, putting the homeowner at a higher risk of filing more catastrophic insurance claims. Main Point #3 Proximity of the home to a fire station and the quality of local fire protection services The closer a home is to a fire station and fire hydrant, the more homeowners save on their home insurance. Insurance costs less because an insurance policy covers damages caused by fire. Homes located far away from a fire station and homes located to a fire hydrant that water travels through old rusty pipes can take longer for fire to be put out. This increases a home’s likelihood of being entirely destroyed in the event of a fire, and as a result costing more to insure. Main Point #4 Having an alarm system When homeowners inform their insurance company that they have a ranked monitoring alarm system in their home, they qualify for a home insurance credit that takes about $300 off of their annual premium. Insurance company feel more comfortable insuring a home when they know that there is a half-decent alarm system in place and set. Main Point #5 Add-on coverage Home insurance premiums are higher when add-on coverage is bought. For example, homeowners that live in a flood zone pay less for regular home insurance. They still pay for home insurance however because a basic homeowner’s insurance policy does not give them enough coverage in the event of a major event from flooding.
