The largest single investment most consumers make is in their home. Unfortunately, the cost for homeowners insurance coverage has increased significantly over the last five years. With many companies offering numerous types of policies, it is important to understand what affects the rates, also known as the premium, and what can be done to minimize this necessary expense.
Credit Rating
Having a good credit rating can help lower your insurance rates especially when the initial search is done for an insurance company. When insurance companies see a good credit rating, 700 or above, they will interpret this as a sign of responsibility. As a result, the companies are more likely to offer discounts based on that.
To protect your credit standing or even establish a good score, pay your bills on time. Do not obtain more credit than you need and keep the credit balances as low as possible. Additionally do not forget to check your credit record on a regular basis and have any errors corrected immediately.
Condition of Property
Insurance companies will inspect such areas as the condition of the roof, decks and porches. They will look at the electrical, heat and plumbing to determine their integrity. A newer home tends to be in better condition than older homes so a discount may be offered as a result.
To help reduce your premium, do preventative maintenance on the home. Repairing problems quickly can help avoid substantial losses in the future. Individuals who repeatedly file claims for minor problems could face higher premiums or even endanger their insurability.
Safety
Many insurance companies offer discounts for safety features such as smoke detectors, sprinkler systems, burglar alarms, deadbolts, and window locks. The location of the home, such as its proximity to a fire department will also determine if a discount is offered.
Every neighborhood across the country has its own distinctive characteristics that will have an affect on the premium. Some of them are population, crime rate, history of the area and location to a major city. With increased population comes a higher crime rate. Historic neighborhoods tend to have more of a police presence resulting in a lower crime rate. Understanding the neighborhood will give an indication as what to expect with an insurance quote.
Increase Your Deductible
A deductible is the amount of money you have to pay toward a loss before the insurance company starts to pay on a claim. The higher your deductible, the more money you save on the premium. Today most companies recommend a $500 deductible. A substantial savings on the premium can be obtained if this deductible amount is raised to $1000.
At the end of the day, homeowners insurance is there to offer peace of mind. Understanding what can be done to control the rates will save you money throughout the term of the policy.