Today, we have a blog post that will explain the cost of home insurance.
In the United States, the average monthly home insurance premium is around $1,200 according to the Insurance Information Institute. But the price of your homeowners insurance depends on five main factors: where you live, the age of your home, your insurance claims history, your credit history, and the value of your home and belongings. But you can still exert some degree of control over the cost by adjusting coverage levels and your deductible amount (the higher your deductible, the lower your monthly premium).
Factor 1: Where You Live
Across the United States, the average home insurance premium varies pretty wildly, from around $650 per year in Oregon to almost $2,000 in Louisiana. Why? Because different parts of the country face different risk factors, like hurricanes on the gulf coast and tornadoes on the plains.
Factor 2: The Age of Your Home
This one is pretty simple — the older your home, the more wear and tear it’s accumulated over the years. Houses with ancient plumbing, outdated electrical systems, and aluminum wiring are more likely to cause problems, so if you fall in love with a mid-century ranch, make sure you can afford the higher insurance rates. Plus, older homes are often more expensive to repair, since modern standards for HVAC, plumbing, and electrical systems are higher than in the past.
Factor 3: Your Claims History
It might not seem fair, but if you’ve submitted homeowners insurance claims in the past, providers will probably raise the cost of your premium. The more claims you’ve submitted, the more risk you represent in the eyes of an insurer. It’s not that different from a car insurance provider that asks if you’ve been involved in any accidents.
Factor 4: Your Credit History
Along with your claims history, a homeowners insurance provider will look at your personal credit history to determine how much of a financial risk you might pose. Hopefully, you’ve already gotten your credit score in good shape prior to buying a home, but if not, your premium will definitely be higher.
Factor 5: The Value of Your Home and Belongings
This one is obvious — a $500,000 house costs more to repair than a $250,000 one, and expensive belongings cost more to replace. That’s why getting an accurate assessment of your home’s value is crucial; otherwise, your homeowners insurance claim might not cover all the repairs you need.
Sourced: Review.com
