When it comes to home insurance, paying for it is fairly straightforward. As long as you pay your premium, you will be covered. A premium is a monthly payment you must make in order to keep your insurance policy in force.
But how is this rate determined? Premiums are different for everyone, depending on a few
- Your Home’s Location
- Your Insurance Score
- Amount of Coverage
- Qualities of Your Home
Calculating Your Premium: Location
Your homeowners insurance premium will vary depending on where you live. Areas prone to natural disasters, such as coastal tropical storm and wildfire-prone locations, will likely cost more than more temperate, mild places.
Your credit-based insurance score is a calculation of various factors related to your credit score in order to determine the likelihood of you filing a claim. All you need to know is that the higher your credit score, the lower your insurance cost will be.
Of course, like all insurance policies, the amount of insurance you purchase will determine the amount you pay. The general rule of thumb? Buy as much coverage as it would take to rebuild your home from the ground up.
Don’t think of more coverage as a bad thing—just because your month-to-month costs are higher does not automatically mean that you have a bad plan. Say you live in a windstorm-prone area. You will likely want to purchase more coverage for roof replacement in case something happens.
And, if you want to lower your month-to-month rates, you could always ask to raise your deductible. This is the flat fee you must pay each time you file a claim—it will cost less on a regular basis, but will cost a lot more out-of-pocket at the time of the incident.
Your Home Itself
Your premium is also calculated based on your home itself. The age, size, and build of your home all contribute to your potential need for coverage, therefore raising or lowering your rates. The larger your home, the more it would cost to rebuild, thus giving you a higher premium. The older your home is, the more likely damage is to occur. And, if your home is constructed poorly, the more coverage you will likely need, all of which contributes to your premium.
Need Help Estimating Your Premium? Call Redwood Agency Group
A lot of these questions regarding your premium can be answered with one simple phone call. Redwood Agency Group takes care of its customers, and we will do what it takes to make sure you have everything you need to know about your home insurance.
When you’re ready to get started, we’re here for you. Give us a call at (512) 994-0894 today.