Exactly what goes into determining your home insurance premiums?  And why do you feel like you have no control over it?

Many factors are used by insurance actuaries to determine home insurance rates.  You may be surprised to know that credit scores have a big impact on insurance rates.  If you can improve credit score, you can lower your insurance rates and save money.

You do have control over most of the factors used; including improve credit scores.  Let’s review what is used to determine the home insurance premiums that you pay and then you can decide if you have the control.

Factors Determining Home Insurance Premiums

Your Coverage Choices:

  • Home Insurance RatesYour home insurance premiums will vary depending upon your coverage options.
  • Your coverage choices have to be made at the time you purchase the insurance policy not at the time of a claim.
  • You can choose Replacement Cost or Actual Cash Value.
  • When you have a home insurance claim, your settlement is either paid at Replacement Cost or Actual Cash Value.
  • Depreciation is not factored in on a replacement cost settlement.
  • Actual cash value settlements do consider depreciation.
  • If you chose a high deductible, your insurance premiums will be lower.
  • If you schedule jewelry or fine arts, your home insurance premiums will be slightly higher.
  • If you include water back up coverage as a part of your insurance package, your premiums will be higher.

Discounts:

  • Home insurance rates start at a base amount. That base amount can be lowered by discounts.
  • A discount will apply by insuring your car with the same carrier that you insure your home with.
  • Some insurance companies will also give you a discount if you also buy life insurance from them.
  • You can get discounts for having a security system such as a fire alarm, burglar alarm or smoke detectors.

Your Credit Scores:

  • A good credit score can lower your home insurance rates.
  • If you improve credit score, you can save money on insurance.
  • Most insurance companies take credit scores very seriously and so should you.
  • The bench mark of a good credit score is 750.
  • If your credit score is below 750, get some credit repair help to improve credit score.
  • By getting some credit repair help you may be surprised on how much you can lower your home insurance premiums.
  • And a bad credit score can also raise your insurance premiums; so if you have a credit score below 750, work on improve credit score.

Your Claim History

  • A good claim record will help to keep your premiums low.
  • Talk with your insurance agent about the claim history benchmarks used at your insurance company.

Home insurance is sometimes called home and contents insurance because the policy will pay for damages to your home and personal property.

Having home and contents insurance is not the law like having auto insurance is.  But having home insurance gives you peace of mind for catastrophes.   Home insurance rates can seem quite steep sometimes, so finding ways to lower the price can turn out to be quite beneficial.

Most mortgage companies will require you to carry homeowners insurance on your dwelling while you have a mortgage balance.