What Factors Determine Your Home Insurance Premium?
Home insurance premiums aren’t quite rocket science, but they’re not paint-by-numbers, either! The truth is, insurance is no less complicated than the mountain of mortgage paperwork that comes with it. The factors that insurance companies take into account in deciding your specific insurance premium will vary from those of your neighbors and your friends, which is why we wanted to answer some of the questions about what the factors are that determine your home insurance premium, how they’re determined, and how they change.
Why Do I Need Insurance?
Homeowners insurance is required because unfortunately few of us are financially capable of rebuilding a house in the event of a disaster. Insurance companies in Houston hope for the best but plan for the worst. That is, they assume that a disaster won’t befall you specifically, but they know that it’s statistically guaranteed that it will happen to someone at sometime. And disasters are expensive.
What Exactly Is a Premium?
Because of the high cost of disasters (and liability-related claims in general), Houston insurance companies charge premiums. Insurance premiums for homes are no different than health insurance premiums. They’re a small payment made on a usually monthly basis in order to protect against the potentiality of a more costly event later.
How Are Premiums Determined?
This is where things can get complicated. Premiums are set by Houston insurance companies based on a multitude of factors, some obvious (such as whether or not your house is on a floodplain or a fault line), and some less so.
Here are the six most frequently asked questions about factors that contribute to the premium for your home insurance:
Does age of my home affect my premium?
The age of your home is a significant factor for Houston insurance companies in determining the cost of your insurance premium. The newer your home, the cheaper it is to ensure. This is based on the fair assumption that an older home has more things that will need repair.
Does the size of my home affect my premium?
The square footage of your home is another factor, and for the same reason. The bigger the house, the more that can go wrong and the more expensive it would be to fix, rebuild, or (in the event of a disaster) pay off. Having a larger home is a luxury, but it’s one you pay for on the insurance side.
Does the amount of occupants affect my premium?
Empty-nesters have the advantage here, and for good cause. The more occupants in a house, the larger the liability and the greater potential for use, wear, and damage.
Does proximity to schools & parks affect my premium?
Everyone who’s ever purchased a house has first considered its proximity to schools, stores, and parks. Rather than amenities and schools, insurance companies in Houston evaluate whether a home is in a community that has a dispatch center, fire department, and nearby water supply. According to the ISO, which analyses communities’ protection classifications, “the price of fire insurance in a community with a good PPC is substantially lower than in a community with a poor PPC, assuming all other factors are equal.”
Do safety & security factor into my premium?
The more stuff you have the higher your premiums will be, but you can mitigate this with increased security measures. Alarm systems, deadbolts, barred windows, security doors, floodlights, fences, and even the presence and profile of your neighborhood watch program are all factors that will work in your favor when it comes to life and property as well as your premium. If you can rally your neighbors to take the same measures, the crime rate of your neighborhood over the long run will also improve, reducing the number of claims in your area and further improving the price of your home insurance premium.
Do pets & pools impact my home insurance premium?
Dogs are historically devastating to yards, but the cost to a homeowner is more likely to be passed down due to the type of dog you own, not necessarily the fact that you own a dog at all. Breed matters, as it can be expensive to settle a lawsuit with a neighbor who gets bit on your property. Pools present the same prospect for danger, and homes equipped with pools are likely to have a higher home insurance premium as a result.
Get the Best Insurance in Houston From Texan Insurance!
Contact us today to learn more about the insurance issues that matter to you and your family. At Texan Insurance, we’re proud of the values that serve as the foundation of our business. Our pledge is to our customers that when we ask, “How can we help you today?” it’s not just a greeting, but a genuine request. We are here to help, so do not hesitate to ask!