The Hard Market: What’s Going on in Personal Insurance

When you own a home like your neighbor’s, you can expect certain household expenses will be comparable to theirs. The cost of your homeowner’s insurance, however, is not one of them. There are a variety of factors that determine the cost of your homeowner’s coverage, and they are unique to your home and lifestyle.  So why would your homeowner’s premium be different than what your friends and family who own similar homes are paying? Let’s look at some of the factors that determine your home insurance rates: ⦁ Credit History/Score Your credit history/score is something insurance carriers take into consideration when calculating your homeowner’s insurance rates. Payment history, outstanding debt, credit history length, pursuit of new credit, and credit mix are all pieces of your credit history that can make you look favorable or not-so-appealing to an insurance carrier. ⦁ Claims History No matter where you move, your claims history follows you. Insurance carriers look at your claims history to determine your future likelihood of filing claims. The type of claims and number of claims you have filed is carefully reviewed and taken into consideration when determining both your rate and eligibility. ⦁ Distance from Local Fire Department & Fire Hydrant According to the Insurance Information Institute, homes located near fire departments and fire hydrants enjoy a lower premium than those located farther away. The reasoning is simple: in the event of a fire, the incident can be addressed more quickly, and thus, the damage that occurs for an insurance carrier to pay out on can be minimized. ⦁ Coastal Exposure Waterfront property is desirable because of the natural beauty it offers, but if you purchase a home near the coast or in a wind zone, be prepared for a higher insurance premium and a higher deductible when it comes to storms. Depending on where you live, you may also need an additional windstorm policy or separate deductible for hurricanes. ⦁ Multiline Discount Most carriers will give you a better rate on your homeowner’s insurance if you package or bundle it with your auto insurance. The same applies for adding in coverage for your jewelry, boat, motorcycle, etc. The more items you have with one insurance carrier, the better your rates will be. ⦁ Replacement Cost If your house were to burn down, the Replacement Cost would be what it would cost to re-build your home exactly as it stands now. That’s why underinsuring to get your premium down is a bad idea. The last thing you’d want after a catastrophic loss is to find out you don’t have enough coverage to bring you back to where you were before an incident occurred. ⦁ Marital Status Just like married couples get a break on their taxes, they get a break on their homeowner’s coverage. Why? Historically, insurance carriers have observed that couples tend to file fewer claims than singles, and as a result, are seen as lower risk to insure. ⦁ Deductible Amount Your deductible is the amount of money you are willing to pay toward a claim before your insurance coverage kicks in. So, it should come as no surprise that the higher the deductible, the more money you save on premium. Determining the right deductible for your household is an important decision, and one you should work with your insurance agent to make. ⦁ Home Liability Limits Personal liability limits should be carefully considered based on your personal assets. In some cases, it might make sense for a homeowner to purchase an Umbrella policy. In others it might be sufficient to simply carry coverage with higher liability limits. Most standard carriers offer $500,000 in liability, but you can go up to $1 million in liability coverage with an Umbrella. Discuss these options with your insurance agent to select the best option for you. ⦁ Age & Condition of Your Home The size, age, and type of construction of your home all play a role in determining the cost of your homeowner’s coverage. For example, an older home may be more difficult to repair should damage occur – and as a result, more costly for the insurance carrier to pay a claim on because materials today might not be what they were when the house was originally constructed (e.g., plaster vs drywall). ⦁ Wood-burning Stoves & Fireplaces Few things add to the atmosphere of a home the way a wood-burning stove or fireplace do. The same can be said for how it can add to your insurance premium. Although the increase in premium for having these items is small, providing your insurance carrier with proof that your wood-burning stove or fireplace is up to code and has been installed by a licensed contractor might help lower it. ⦁ Swimming Pool or Hot Tub While the increase in premium for owning one of these outstanding additions to your home is small, its important that you have enough liability coverage to address any injuries or accidents that might occur on your property because of your pool or hot tub. If you’d like to ask questions about what you’ve just read or get a homeowner’s insurance quote, give us a call at 845-239-4787 or reach out to Vicki Hoffman at vicki@jhoffmaninsurance.com .

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