Multiple Factors Go into the Cost of Homeowner’s Insurance

Buying a new home is a rewarding and exciting experience. Owning a home also includes new responsibilities such as upkeep, maintenance, and new expenses. In fact, home insurance is the first thing you need to look for when you buy a home and as you start requesting quotes from multiple carriers, you may be surprised to find the cost of homeowner’s insurance varies depending on the company. Multiple factors go into calculating the cost and every company approaches them differently.

Here are five factors that impact the cost of homeowner’s insurance:

1. Where you live.

Where you buy a home is one of the biggest factors in the cost of homeowner’s insurance. Insurance companies will look at how far away the nearest fire hydrant or firehouse is located.

The further away an available water supply is, the higher your rates will be because there is a greater chance of a total loss occurring.

2. Characteristics of the home you buy.

The characteristics of your home are also factors that determine the cost of homeowner’s insurance. Insurance companies consider the home’s age, roof type, composition, and size when calculating costs.

The older your home or roof is, the higher your insurance is because they pose a more significant risk. If your home is brick, it is considered to be more fire-resistive and less of a risk resulting in lower premiums.

3. Pools and trampolines

While pools and trampolines are a lot of fun for children of all ages, they also create a bigger personal liability risk for homeowners. If a neighbor is injured while using one of them, you may be responsible for the medical expenses and loss of income that results. Insurance companies charge an additional premium to cover this exposure. To help minimize the increase, ask insurance companies if there is a discount for keeping your backyard gated and locked.

4. The replacement cost of the home.

Every home is unique, and some cost more to replace than others. Insurance companies based their policy rates on how much it will cost to rebuild your home and replace all of your belongings. Some homeowners choose to insure the actual cash value to save money, but this is not typically recommended if you want to replace your home. Actual cash value will only give you the amount your property was worth factoring in depreciation.

5. The deductible.

A deductible is the amount of a claim that you are responsible for paying before your homeowner’s insurance policy kicks in. The higher your deductible, the more money you save on homeowner’s insurance premiums. Some insurance carriers offer a 25% savings when you increase your deductible from $500 to $1,000.

Are you looking to buy homeowner’s insurance for your new or existing home in New Jersey? The experienced insurance professionals at Schechner Lifson Corporation are ready to help. Contact our office today to schedule an appointment.