P.J. Miller - Partner
Homeowners insurance premiums vary from state to state in the U.S., so what impacts the rates? Partner P.J. Miller spoke with Bankrate to examine the various factors that determine home insurance premiums.
Credit history
Like bank lenders, many insurers check homeowners’ credit in assessing the level of risk they are taking on.
“Most insurance carriers use credit as a portion of the rate-setting process in states where it is permitted,” said P.J. “While it is supposed to be a ‘portion’ of the rate calculation, most believe it plays a significant role in determining the price for homeowners insurance.”
Claims history
Insurance companies often base decisions on patterns of behavior. When a homeowner files a claim, the homeowners insurance company assumes that he or she is more likely to file additional claims in the future.
P.J. went on to explain how the type and number of claims you make could influence rates. “Even if claims were made in a previous home, this history will follow you,” he said.
Age of home
If you live in an older home or one that would likely need a lot of improvements if rebuilt, you will likely pay a higher home insurance premium.
P.J. explained that age and location are important factors in determining the cost to rebuild a home. “Insurers will assess the difficulty to replace or repair your home to determine rates,” Miller said. He added that home improvements such as roof replacement, upgrades to your electrical, heating or plumbing system and the installation of a security system “can all positively impact your rate as the likelihood of a loss declines.”
P.J. noted that your insurance agent should be notified of any upgrades to your home.
Deductible
A homeowners insurance deductible sets the amount that you will pay out of pocket. Agreeing to a higher deductible will decrease your premium, but it could also cost you more in the event of a claim.
“Many insurers also offer disappearing deductibles, which means they reduce your deductible if you don’t have any claims over a certain time period,” P.J. said.
The above are just a few of the factors that may be considered in your homeowners insurance. Click here to read the full article and learn more.
Questions about homeowners insurance coverage? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.