7 Factors That Affect Your Homeowners Insurance Quotes

May 6, 2023

Most homeowners know that their home's location and construction style impact their insurance rates. But other factors may surprise you. For instance, having a pool, hot tub, or trampoline increases the likelihood of someone getting injured on your property, leading to higher premiums. Other rating factors may include your credit history and how often you file claims.

Your Credit Score

Your credit score is a key factor in homeowners insurance quotes. Your mortgage, auto loans, and credit cards affect your FICO score. Still, several other factors can impact your insurance scores, including your total credit card limits, whether you've recently applied for credit, how many accounts you have, and more. In addition to your overall credit score, many insurers also use a particular version of your credit report called a "credit-based insurance score." According to FICO, 85% of home insurers use these special scores to determine premiums in states that allow them. To get a quote, an insurer may do what's known as a "soft pull" of your credit information, which doesn't affect your score. However, they'll also consider the other factors listed above.

Your Claims History

If you've filed a homeowners insurance claim in the past, your insurance quotes will likely be higher than those of someone with no claims. The number of claims you've had may affect your premium, as will the type of losses. Insurance companies often check the CLUE (Claims History Evaluation) report to understand your risk better. This report is available to consumers free of charge under the Fair and Accurate Credit Transaction Act.

Water damage claims, for instance, are viewed as preventable and, therefore, will typically have less impact on your rate than a fire or other loss. Also, many insurers consider neighborhood crime rates when determining your rates. Neighborhoods with a lot of burglaries could result in higher rates.

Your Home's Location

The location of your home can have a big impact on your homeowner's insurance rates. Certain areas are at a higher risk for vandalism, theft, and natural disasters such as floods, earthquakes, or wildfires. This is especially true for homes in large cities, vacation and retirement areas with rapid economic growth, and those near a sewage treatment plant. The neighborhood is another important consideration. People often want to live in safe, well-connected neighborhoods with easy access to transportation, shopping, and good schools.

The construction materials of your house can also affect your insurance premium. For instance, houses built with modern materials like brick or masonry can have lower rates than wood-made ones. On-property risks such as swimming pools or trampolines can also cause your insurance premium to go up.

The Age of Your Home

The age of your home can affect the cost of homeowners insurance. Older homes tend to cost more to insure because they may be more expensive to repair or replace if something goes wrong. Additionally, older homes may be less up-to-date regarding plumbing, electrical, and HVAC systems. Having these updated can help bring down the cost of homeowners insurance.

Some building materials are also more durable than others, so the type of house you live in can influence your rates. For example, homes built with brick or masonry generally have lower rates than wood frame houses. Similarly, installing safety features like fire alarms or deadbolt locks can reduce your home insurance rates. 

The Value of Your Home

The value of your home is vital for many reasons, but mainly because it influences how much you pay for homeowners insurance. Some factors determining your home's value are out of your control, such as the quality of nearby schools and disputes over property lines. Still, others are more within your influence, like installing security systems or bundling home and auto coverage.

You may hear about home values being reported locally, state, and nationally. While these reports can help discuss trends, they are only sometimes representative of what individual homeowners are experiencing in their neighborhoods. That's why keeping an eye on your home's value every year is essential, especially when considering buying or selling.

The Type of Coverage You Need

A home insurance policy includes several different types of coverage, including dwelling coverage (which pays to rebuild your house or repair damage to it), personal property coverage (which covers your possessions), and liability coverage, which pays for injuries that you or your family members cause on your property. You can also add ordinance or law coverage, which pays to get your home up to current local building codes.

You can do many things to lower your homeowner's insurance rates. For example, improving your credit score can significantly cut your rate and raise your deductible. You can also add safety and security features like a home alarm system or fire sprinklers to help reduce your rate. However, some factors that impact your rates and eligibility with some companies may surprise you.

The Company You Choose

Ultimately, you'll want to choose a company that provides excellent customer service and competitive pricing. This is especially important if you ever have to file a claim, as good customer service can help to alleviate some of the stress that may come with an insurance claim.

Many factors can affect your homeowner's insurance quotes, including your credit and claim history, the age of your home, and the type of coverage you need. However, by shopping around and taking advantage of discounts, you can ensure you get the best possible price on your homeowners' insurance. For example, if you can afford to bundle your home and auto policies, you can save up to 15%. 


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