Stephen is an insurance agent and former underwriter of 10 years who blogs about topics that affect you and your money.
What Impacts My Price
When you get a quote for home insurance, the agent will ask a variety of questions that categorize the risk of your home. There are a number of factors at play and these are just to name a few.
I'll start with risk factors that are under your control:
Some states don't allow credit rating to impact your rate, like California. Most do, and this is a key factor in determining rate for most companies.
Most companies look back 5 years, and while one small claim won't hurt you much, several small claims or any larger amounts (more than a few thousand) will definitely impact your price.
Having been with your prior carrier for a number of years helps. A period of having no insurance may raise your price or may lead to a rejected quote outright. If you've lapsed in coverage and are having a hard time getting a price, or one that comes back in your price range, consider reaching out to a broker who may have some standard and non-standard companies they also sell for.
Having a pool or a trampoline can raise cost.
Owning a higher risk breed of dog, like it or not, can affect your price. Dalmatians, pit bulls and german shepherds can be listed as possible increases.
And these are less under your control:
Where you live determines what state guidelines your policy is subject to. Some states require certain coverages to be included automatically.
Likelihood of Natural Disasters
Frequent hailstorms, tornadoes and even flood areas can affect your price. Often, the states pool risk on these and the company has no option other than to price in the collective risk.
Home insurance 101
How Do I Lower My Rate?
I've been on both ends of the conversation. The homeowner wants lower prices and the insurance company thinks it has to cost what they're charging you. As the consumer, you have options.
Here are a few strategies:
List Major Upgrades
These can have an enormous impact on your cost.
- Roof is often then biggest. Make sure they have the correct age of your roof. If it's been updated since you started your policy, call them now and tell them. Sometimes it won't do much, but often it does.
- HVAC system updates
- Plumbing updates
- Electrical/ breaker upgrades
Ask for a Re-rate
If you're happy with the company, but not the price, you can always ask them for a re-rate. Some are happy to oblige, others don't have an option.
They run your policy through their system as though you're a new customer and sometimes it has a huge impact.
Some reasons are:
- Your credit improved since the policy started
- Their rating system is different than when your policy started, so the update improves your risk category
- In the process of rewriting it, they ask you the questions again and catch something positive they missed before.
Fill Lapses in Insurance
If you find yourself without coverage, they will charge you more when you try and return. You'll need 6 months to a year of continuous coverage to get a positive benefit from many companies.
Find someone who can cover you, even basic fire protection from a dwelling policy as opposed to a standard homeowner's policy. Dwelling policies tend to have a very basic list of protections like fire, tornado, wind and not much else, but can also be enhanced with options to be similar to a home policy. The costs can be much lower, especially on previously uninsured properties.
Walk Through All of Your Options
Your policy is made up of a staggering list of coverages. Some are optional, some are not.
Here are some that can change your price significantly:
- Water backup
- Personal property at replacement cost (as opposed to actual cash value)
- Mold coverage
- Scheduled property/ property riders (for guns, jewelry and collectable items)
Request That Your Home Valuation Be Reassessed
This can help, especially if it's been years since they asked you about what the outside and inside of your home are like. This can also be risky, since I find that most valuations are either correct or actually lower than they should be.
Some tips for this:
- Be specific - make sure they know you have a slab foundation and not a crawl space, or that you have a crawl space and not a pier and beam.
- Go into detail - Your floor types and wall coverings are going to affect rebuild costs. Even if they're more expensive, sometimes those are less risky in terms of rebuild.
- Have them estimate your kitchen and bathrooms and describe what "builder grade", "standard", "Premium" and "Designer" mean to the company. Maybe your wonderful kitchen is really able to be replaced at standard instead of premium grade pricing, which could carve $15k off of your required dwelling limit.