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How Your Home Affects Your Home Insurance Rate

How Your Home Affects Your Home Insurance Rate

Last week we looked at how you, the buyer and homeowner, impact your home insurance rate. The second broad category impacting your home insurance premium is your home itself. There are several factors and none of them include your home’s purchase price, what you could sell it for, nor what the local appraisal district sets the value at. Let’s look at what does count. Replacement Cost: The replacement cost value is the amount of insurance needed to replace your home in the event of a total loss such as a fire. This is calculated by each carrier’s replacement cost estimator, and includes your home’s square footage, number of stories, number and grade of bathrooms, kitchen grade, floor coverings, siding, roof shape and shingle type, foundation type, number and size of rooms, built-ins, and much more. The amount of coverage needed to replace your home impacts what you pay. Siding Type: The type of siding your home has impacts both the replacement cost and the insurance rate. For instance, brick siding cost more than wood siding, so a brick home will usually have a higher replacement cost than a home with wood siding. However, since wood is more flammable than brick, a home with wood siding will cost more to insure than a comparable brick home. Fire resistant materials such as stone, concrete fiber boards, and concrete stucco will also have a lower home insurance rate than a wood home. Roof: There are three ways roofs impact your home insurance rate, its shape, shingle type, and age. A gable roof will have a different rate than a hip, gambrel, Saltbox, tented or other roof style. A home with composition shingles will have a different rate than a home with a tile, slate, or concrete roof, and a hail resistant shingle will cost less than a home with a composition shingle roof. A roof’s age also impacts the rate. Older roofs have a higher rate than new roofs, and they may also carry a higher wind / hail deductible such as 1.5% or 2% depending on the carrier. Some carriers won’t write a home insurance policy if the roof’s over 15 years old, or they may shift the coverage from replacement cost to actual cash value which pays a claim on a depreciated basis. Home Age: New and newer homes have a lower home insurance rate than older homes. There are a few carriers who won’t write a home insurance policy on a home over 40 years old. Location: Where your home is located impacts the rate too. For example, a home in McKinney will have a different rate than a home in Dallas, Fort Worth,...

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How You Impact Your Home Insurance Rate

How You Impact Your Home Insurance Rate

Most people don’t realize there are many factors which impact their home insurance rate; some are related to the home and some are not. In fact, you may have as much to do with what your home insurance rate is as your home does. There are three broad areas which impact your home insurance rate including you, your home, and the insurance policy itself. This week, we’ll examine four ways how you, the homeowner, impact the rate and examine the other two areas over the next two weeks. Credit: Your credit, or insurance score as insurance companies refer to it, is one of the major determining factors to how much you’ll pay for home insurance. The better your credit score is, the less you’ll pay. Conversely, if you have a lower credit score you’ll pay more for your home policy. The reason for this practice in Texas and 46 other states is, insurance companies view credit as a predictor of future claims. The statistical data used to justify this practice shows people with lower or poor credit are more likely to file a claim than people with good or excellent credit. If you want to pay less for your home and car insurance, then improve your credit score. If you’re wondering which three states don’t permit credit to be used as a rating factor, they are California, Hawaii, and Massachusetts. Marital Status: Are you married or single? Not all home insurance companies use your marital status as a factor to determine your home insurance rate, however many do. If everything else is equal, married homeowners typically pay less than non-married homeowners. The companies which use marital status as a rating factor believe married couples are either more responsible or make a more desirable client as they may need additional policies such as auto and an umbrella. Education Level: Many home insurance companies provide a better rate for people with college degrees. For instance, if you have a bachelor’s degree, you’ll pay less for home insurance than someone with an associate’s degree. If you have a master’s or doctorate degree, or attended medical or law school, you’ll pay even less for a policy with the companies which use this as a factor. Occupation: Like education level, there are insurance companies who charge different rates based on what you do for a living. If you’re a manager, director, or executive, you’ll pay less than someone in sales, a trade, receptionist, etc. Other companies offer special discounts or programs for teachers, firemen, or veterans, etc. These four factors have absolutely nothing to do with your home, so why do they impact your home insurance rate? It may...

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