What drives up my home insurance costs? Why is my insurance premiums so high? If you're a new homeowner, this must be one of the many questions that have crossed your mind since you embarked on this new journey. Well, the location, construction, condition, and certain features of your home all play a significant part in how much your homeowner’s insurance costs will be. For buyers who are still house-hunting for their dream home, you need to be aware that some of the factors that will attract you to a particular home are also the ones that will make your premiums more expensive.
Here are some of the home's features that may inevitably affect your homeowner’s insurance rates:
1. Age and construction of the home - One important factor that is being considered when insurers assess a home's risks is its build and structure. Older homes, even if they’re well-maintained, are generally more expensive to insure especially if it’s made of wood. Homes with wooden frames are more likely to suffer from fire compared to concrete or brick homes, so the risk is definitely higher. This is also the reason why homeowner’s insurance on historic homes is often more expensive. Older homes also often pose many structural issues so insurance rates could be increased
2. Location - Aside from the general construction of your home, where you live has a big impact on your homeowner's insurance costs. If you live in an area of the country that is more prone to experiencing natural disasters—hurricanes, tornadoes, earthquakes, you name it—the more expensive it will be to insure your dwelling. Specifically, those who live in hurricane-prone areas may also need to purchase additional flood insurance.
Likewise, you may also face more expensive insurance premiums if you live in a neighborhood that have more claims, particularly because of rampant theft, crime, and break-ins. You’ll also have higher premiums if you live in the country which is too far away from emergency services.
How to keep costs down: If you live in a risky area that has a greater chance of experiencing a natural disaster, you can minimize your insurance costs by purchasing a home built to withstand the elements. In Florida for example, residents prefer to live in a concrete block structure (CBS) home rather than a wood-frame home to reduce their insurance premiums.
The presence of home alarm systems and surveillance cameras can also make a difference if you live in a neighborhood with a high theft rate.
3. Swimming Pools and hot tubs - Swimming pools are a great way to relax and cool off especially during the summer season. However, they are also potentially dangerous, especially to children, because of the possibility of drowning and other related injuries. Insurance companies even consider pools to be “attractive nuisances” because of possible pool-related lawsuits. Pool owners will need to purchase additional liability protection so that they can protect themselves against possible pool-related lawsuits. This liability protection can lead to high insurance costs. Additional features like a diving board or a slide could even mean higher insurance premiums.
Similar to pools, hot tubs are also vulnerable to lawsuits so insurance companies will increase the coverage you need for your home, which would lead to higher premiums.
How to keep costs down: Installing door alarm systems, safety perimeter fences and locked gates around the pool might help keep the liability protection costs down.
4. Trampolines - This popular recreational feature can be found in thousands of backyards in the US. But the catch: it also means higher insurance premiums for homeowners. It is because injuries while using trampolines are very common, often involving children. A homeowner's insurance policy could provide coverage for protection in any trampoline-related claims provided that certain safety precautions are in place, especially if there’s an enclosed safety net installed around the feature to protect anyone using it from falling off. Other recreational things that can be expensive to insure include large play structures, park equipment, and skate ramps.
5. Jewelry and other expensive items - Keeping a lot of expensive pieces of jewelry and other big-ticket items, including high-end watches, wine collections, and musical instruments, can lead to extra home insurance premiums.
6. Paintings and antiques - Your treasured collection of antiques, paintings, sculptures, and other forms of fine art can be very difficult to replace. These most-prized possessions actually make it hard for any insurance company to be willing to insure it.
7. Fireplace/wood stove - Are you one of those homeowners who still own a wood-burning stove? It can be a cost-efficient alternative to heating your home, but they are a big fire hazard. These stoves are more likely to start a fire than any other modern appliances, especially when left unattended. In the eyes of many insurance companies, the risk of fire damage is increased so they apply a surcharge. Having a wood-burning stove in your home means you may be saving money on heating, but definitely spending more on insurance.
How to keep costs down: Installing smoke alarms, purchasing fire extinguishers to be situated in strategic locations around the home, and hiring a licensed technician to perform routine maintenance on the wood stove can help you get the best possible price for your insurance.
8. Oil-based heating - An oil-based heating system, which is commonly found in many older homes, can mean a lot of trouble for many insurers. Having an oil tank on your property means having a large amount of highly flammable substance that can cause massive fire and environmental damage. Insurance companies mostly prefer electric heat pumps or forced-air furnaces. Converting to these safer types of heating may just be the key to lowering your insurance premiums.
9. Home-based business and keeping your business inventory - If you're running an in-home business, such as a daycare, accounting, bed and breakfast, etc., you’ll have more at stake since extra people are coming in and out of your home. That means there’s a greater chance that someone could be injured. Likewise, you could face higher insurance premiums if you’re keeping your business inventory on your property. Both your personal possessions and business property are susceptible to being lost, damaged, or stolen if some thieves broke in. It’s applicable to those who own a craft store or an online selling business.
10. Condition of the home's roof - Roofing is another big ticket item that can have a major impact on a homeowner’s insurance premiums. Wood shakes and shingles can be a stunning addition to the exterior of your home and can give it a unique look. However, they are also one of the least reliable types of roofs because they are more prone to damage from rot or mold, more vulnerable to weather hazards, and will not resist fire. If your home has this type of roof you can expect to pay more for your insurance. The older and more damaged your roof is, the more expensive your insurance can get. As much as possible, choose a house with a roof that best fits your geographical location, especially if you live in hurricane-prone areas.
11. Finished basement - Despite the fact that it adds more livable square footage to a home, a finished basement can also drive up costs because it has a higher chance of getting damaged in case of a flood, a burst pipe, or clogged and backed-up sewage.
Dogs - Well, they're not necessarily a house feature, but your pet dog could also be the reason for your increased insurance premiums. If your dog attacks and bites someone on or near your property, the injured person may file a claim against your home insurance policy. Your premiums will likely increase because you are liable for the damages. It’s especially true if it’s from a breed that is considered aggressive, such as pit bulls or Rottweilers. Be prepared to give your dog(s) training classes to avoid unruly and aggressive dog behavior.
