When you purchase a new home, the first thing that you ask yourself is how much homeowners insurance you will have to pay? This is a critical question particularly if you are trying to formulate a budget for your living expenses. The amount of homeowners insurance that you will end up paying depends on a number of important factors, namely:
The deductible on your insurance policy
The value of your house and personal possessions
Your past claims history
Other variables including the age of your house
Deciding on the best deductible
The deductible is one of the critical factors that determine the amount you will pay for your homeowner’s insurance. It will become clear that you can choose between plans with low or high deductibles. In case you select a plan that has a high deductible, you will probably pay a lower annual fee for your homeowner’s insurance coverage. The disadvantage is that in the event that you need to make a claim for repairs done in your home, you will need to fork out more money to pay the deductible. Conversely, choosing a plan that has a low deductible will likely cost you more upfront, but you will part with less money when making a claim.
Establishing the value of your house and property
The premiums that you pay on your homeowner’s insurance policy are also linked directly to the amount of coverage you get. If you are purchasing an insurance cover for a home that is valued at $250, 000, you will obviously pay more than somebody whose house is valued at half that amount. Do a proper assessment of your home so you can determine the correct amount of coverage.
The valuation of your personal possessions also plays a significant part when valuing your home since homeowners insurance also includes personal property. Assume your home is valued at $100,000 and your personal possessions are valued at $50,000. In such a scenario, you will prefer an insurance policy that covers both your house and your personal possessions. If not, you may still lose when disaster strikes even though you have insurance coverage.
Your past claims history
Your past insurance history can have a great impact on the cost of your homeowner’s insurance. Normally, homeowners who have filed fewer claims incur fewer insurance costs than those who have filed more claims. Insurers will always consider how much of a risk you are to the company. Individuals who have filed more claims are normally taken to be a high risk which means they are charged more upfront.
Not surprisingly, there is a lot involved when making calculations to determine the cost of your homeowner’s insurance. These factors are not restricted to the valuation of your home and past claims history. Listed below are several other factors that are also considered:
- The age of your house – A newly-built home has more reliable plumbing and electrical systems and is built to specified codes to ensure maximum safety. Consequently, it is probably less costly to insure a new home.
- Additional risk factors – If your home has a swimming pool, this can considerably raise your homeowner’s insurance costs. Depending on the breed, keeping a dog can also affect your rate.
There is a lot that is involved when determining the cost of a homeowner’s insurance policy. This is why it is advisable to discuss with an agent in order to establish which coverage is best suited for your needs.