Hazard insurance rates are determined using a variety of criteria. They include information on the house and on the home owner. Circumstances that influence hazard insurance rates is provided below and may be informative for both new and existing home buyers.
Insurance companies may ask for particular information on a home including materials used and electrical and plumbing. Younger houses are typically less to insure than older homes since they include better safety features and materials. Newer plumbing, electrical, and heating and cooling units will reduce fire hazards and other issues. Fire resistant materials, such as brick, may also lower the price of insurance. Fancy home upgrades, on the other hand, may result in higher premiums since it adds to the replacement cost.
The geographic location of a structure influences the perceived risk of forest fires, break-ins, weather damage, etc. Insurance companies will commonly determine how close a property is to the nearest fire station and fire hydrant. Reduced response times can minimize the damage caused, which can reduce the cost of claims. If you live in a region prone to tornadoes, hurricanes, or wild fires, your insurance costs would naturally be greater (some of these conditions require separate coverage riders).
Insurance companies normally review some personal factors as well. For starters, they will pull the history of hazard insurance claims. In the eyes of insurance companies, homeowners with previous filings are more likely to initiate future claims. Thus, they will be quoted a higher premium. In certain instances, they may even be refused coverage.
Credit scores are the second factor. The pattern is that homeowners with high credit ratings start a lower number of insurance claims. They are therefore less risky to have as clients and will receive lower insurance rates.
Why You Should Be Aware of Circumstances That Influence Hazard Insurance Rates
Understanding the factors that affect hazard insurance rates is the best way to save money. If you are buying a house, think about requesting a general estimate. This can alter your monthly payments and can sometimes even affect whether you can purchase a certain property. If you are already a homeowner, consider not submitting claims against your current policy unless the dollar value of the claim is significant. Initiating minor claims could end up hurting you more in the long run than the amount of the claim itself. Also, always try to improve your credit standing. All of this can help save money on hazard insurance rates. Circumstances that influence hazard insurance rates, as discussed above, is intended only as an introduction. Refer to your insurance company for more comprehensive information.