Factors That Impact Homeowner’s Insurance Rates

homeowner's insuranceBefore you make an offer on a home, you should research your homeowners’ insurance costs on that specific home. Insurance costs can vary widely from home to home, based on location, age of the home, home size, condition and more. The Equifax Finance blog recently covered this topic in an article, “
What Factors Influence My Homeowner’s Insurance Rates?” which explains some of the factors that can impact your insurance costs.
Homes located in coastal/beachfront areas and those in low-lying areas or near lakes or rivers, will likely cost more to insure. The risk of damages from weather-related threats, like windstorms or hurricanes is taken into consideration. The same is true for homes in areas that are prone to earthquakes or floods. Most standard homeowners’ insurance policies do not provide coverage for flooding and earthquakes, so this coverage must be purchased separate (or in addition to) your standard policy. In some areas that are especially high-risk, private insurance may not even be available. In those cases, homeowners must insure their homes through government-run programs, many of which are more expensive and provide less coverage. Some programs are government managed but serviced by private companies, like the California Earthquake Authority, which provides coverage for California residents. If a home is located close to a fire station or fire hydrant, it will cost less to insure. Many insurance companies take into consideration the home’s proximity to a fire station and fire hydrant.
The age of the home is also taken into consideration. Older plumbing and electrical systems and roofs will be riskier, and that risk will mean higher premiums. However, if you love an old home, and any of those systems or the roof has been replaced recently, let your insurance company know.
Before making an offer on a home, request a copy of the home’s insurance loss history report, which is a record of claims on the home in the past five years. This report will show you what (if any) claims have been filed, what damages the home sustained and how those damages where repaired. The report gives you important background information on the home but could even lower your insurance premium; if for example, a claim was filed due to hail damage to the roof, and then the roof was completely replaced, you could get a lower rate.
If you have found a home you really love and are planning to make an offer on, the article suggests contact your insurance company upfront to get an estimate on your insurance costs. For recommendation on good insurance companies, ask your real estate agent, family, friends and coworkers.
The full article has even more information on the factors impacting insurance rates. Visit the Equifax Finance blog to read the full article, and while you’re there, check out the other articles on insurance and real estate. There are also hundreds of other helpful articles on a range of personal finance topics from taxes to credit to identity theft protection and more.

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