There are a number of factors which go into the computation of your home insurance premium including age, construction type (brick, wood frame, etc.), age, and roofing material. In addition, there are factors that shape the replacement cost of your home’s insured value which has a direct correlation to what you pay for insurance. These include the number of square, how many stories, the number of living areas, number and grade of bathrooms, kitchen grade (see http://18.104.22.168/~wiseinsu/kitchens-bathrooms-and-home-insurance/), and is there a fireplace or swimming pool.
These factors are obvious, because they all are home related. But did you know there are 3 factors which have nothing to do with the home that impact what you pay for home insurance? These 3 factors are your credit, home location, and pets, and their impact is definitely felt on the bottom line.
Credit: Most insurance companies in Texas use credit to determine the premium rate for home insurance, as well as car, life, and even business insurance. People with good credit will usually pay less for their personal and business insurance than someone with fair or poor credit. The reason for this is credit has been statistically shown to predict future claim frequency, in addition to showing the insurance companies who will pay their bills on time.
Location: Where you live influences the rate you pay on home and car insurance. The premium difference between different areas is greater for home insurance than car insurance. There are several reasons for these differences including crime statistics for a specific zip code, fire department classification, and historical weather related claims such as hail.
In a recent article in the Dallas Morning News, even when two people’s credit, home age, style, and replacement cost, as well as previous claim activity are roughly the same, premiums can vary by hundreds of dollars a year. For example:
- $376 a year more for the home in Arlington than the home in Plano
- $272 a year more for the home in Richardson than the home in Irving
- $296 a year more for the home in Arlington than the home in Garland
Pets: I love most dogs and can tolerate most other pets, however, pets can give a home insurance company heartburn. In cases where the homeowners have dogs, there are certain breeds many insurance companies won’t even write a home policy for if they are present. These include Doberman Pincher, Rottweiler, Pit Bull, and even some of the larger breeds such as Great Dane. Own an exotic pet such as a mix of house cat & lynx and expect the same treatment.
If you own a non-aggressive breed but it’s bitten a delivery person or neighbor, you’ll pay a lot more for your home insurance than you would if there’s no bite history. The reason is the insurance company simply doesn’t want the risk or exposure your fluffy or furry friend represents.
In fact, what all of these factors have in common is risk or exposure. Most insurance companies would prefer to not pay claims. Credit, a home’s location, and the presence of pets increases an insurance companies exposure to risk and makes it more likely they’ll have to pay for a claim. When these factors are present, expect to pay more for your home insurance than someone who doesn’t have these factors.
What do you think? Share your comments, questions, and experiences with us on our Google + and Facebook pages. I’d love to hear from you!