Homeowner’s insurance is a mandatory aspect of home ownership, but the premiums are not similarly controlled. For that reason, it’s important to understand some of the primary factors that influence your insurance premiums, especially the ones you can control. Here are some of those factors and why they lead to higher premiums.
1. Your Credit
Yes, your credit absolutely impacts your homeowner’s insurance along with your claims history. People with lower credit and a high number of claims are generally considered higher insurance risks and, as a result, they are often hit with higher premiums. You should be working on your credit score long before you get to the insurance phase of your home buying process to ensure the best mortgage rates possible, but keeping it up for your insurance assessment is important as well. Credit scores are based on your ability to handle your debt more than the amount you have, so paying off your debts on time and regularly is the most effective way to keep your score up, and your premiums low.
2. Roof Age
Roofs are a commonly overlooked aspect of any home for almost anyone, except insurance companies. Aging roofs not only open the home up to water damage, they can also be extremely expensive to replace, meaning insurance companies prefer homes with newer roofs, and roofing materials that are appropriate for the climate and environment.
3. Plumbing and Electrical
Older homes often need electrical and plumbing upgrades to handle our increased demand for water and electricity. In some older homes, the systems can be so outdated that they can actually become a real insurance risk, which will drive up your premiums. The best way to control this cost is to avoid it in the first place. Always ask about when the plumbing and electrical systems were last upgraded, and avoid homes that aren’t up to code.
Crime, weather, and other factors are all considered, and these are more related to your location more than anything else. If you’re on property near water, for example, your premiums may be higher. If you live in a high crime area, your premiums will increase, too.
5. Wood Stoves
While increasingly uncommon in urban homes, a wood stove is still some people’s favourite way to heat their homes. Unfortunately, insurance companies consider them a large liability and will charge accordingly. Fire places and wood stoves accounted for 11% of living room fires, so wood burning stoves are considered a fire risk.
Higher homeowner’s insurance premiums are dependent on a number of factors, including where your property is located, how up-to-date its systems are, and how it’s heated. Keeping these factors in control will lead to lower rates, and giant savings year-to-year.