Understanding Home Insurance Premiums

Understanding Home Insurance Premiums

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home insurance premiumsYou open up your home insurance premium policy to discover that the amount has changed. How can this happen? This can be confusing because you feel that nothing has changed in your home.  However, there are several reasons that your home insurance premiums can adjust.

The Location of Your Home

You may have experienced more damaging and extreme weather this year which would make your insurance premium increase.  Since your insurance policy needs to cover the cost of rebuilding your home, the construction costs to rebuild it are factored into your insurance premium.

Home Getting Older

As your home gets older major things can happen to it which may cause you to use your insurance policy.  As your roof hits its “teen years” it is more susceptible to wind and other damage.  The same thing goes for your plumbing, heating, and electrical.  As your home ages, your insurance premium will increase.

Doing Renovations

When you build add-ons to your home, these upgrades can also upgrade your insurance premiums.   If you recently put an addition onto your home your premium will go up to cover the cost of rebuilding that added on area.Or maybe you have decided to build that tree house or buy a trampoline for the kids.  These things can be prone to accidents which could result in lawsuits. As a result, insurance companies will increase your premium to protect themselves in these cases. 

Animal Concerns

If you own a certain kind of dog breed (like pit bulls) or a wild animal your insurance premium will reflect that risk.  The insurance companies view these animals as dangerous and therefore will want to protect themselves if you own one.

Having Your Business in Your Home

Having your business in your home may be more convenient but you will see an increased cost in your insurance premium. Now insurance companies need to cover all of your business supplies in case of a disaster. 

Credit Decline

In some states, insurance companies are allowed to look at your credit to determine your insurance premium.  If you have a higher credit score they believe that you are less likely to file a claim which can result in a lower premium.

This increase in your home insurance premium can be shocking. In some cases the number might seem outrageous ,even if the addition is something you have always wanted.  If you don’t like the premium you currently have there are steps you can take to help yourself.  Make sure you look into other insurance companies yearly and consider increasing your deductible to lower your insurance premium.

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