3 Questions Insurers Consider to Determine Home Insurance Rate

Whether you’ve just bought a new home or have been living in your property for quite some time, you have to apply for home insurance right away! More than anything else, every homeowner must make sure their property is insured to protect them from risks and great financial loss.

So, how much should you pay for your home’s insurance?

“What’s My Home Insurance Rate?”

Well, there’s no straight answer. Although the average mortgage payment amounts to $1,275, it doesn’t mean you’ll have to pay that much. You shouldn’t base your insurance rate on the amount your neighbor pays for either because you have different situations.

If you want to look up the exact amount of your insurance premium, you’ll only be provided with vague numbers. Insurance premiums are on a case-by-case basis—insurers don’t give two people the same rates.

To get an estimate of how much your home insurance rate will be, read our list of the most significant questions insurers consider:

Where do you live?

The neighborhood you’re residing in is perhaps the biggest factor that insurers consider to determine your insurance rate. If you’ve been wondering why your location has such a significant impact on your insurance premium, we’ll tell you why: it’s mainly because of natural disasters.

Insurers keep statistics on claims across the area and calculate them into rates. The higher the risk of your house being affected by natural disasters is, the higher your insurance rate will be. So if you live in a neighborhood that’s prone to hurricanes, wildfires, or tornadoes, expect that your insurance premium will be priced on the higher side.

How much would it cost to rebuild your home?

Your home insurance rate will also largely depend on your home’s replacement cost or the amount you’d have to pay to rebuild your home. The replacement cost will be based on the following:

• Age
• Architectural style
• Square footage
• Number of rooms
• Local rebuild costs per square foot

Keep in mind that replacement cost is different from market value, as the latter accounts for intangible features such as proximity to local amenities, land, and view. Once the insurer has considered all factors, they’ll calculate the amount of dwelling coverage you would need, which they will then base your insurance premium on.

How much of a risk are you to insure?

When applying for home insurance, expect insurers to run their version of a credit check. Looking into your credit history helps them assess the level of the risk they will take on—credit history could indicate if you’ll make timely premium payments and how likely you are to file a claim.

To insurers, a good credit score means lower risk so that they’ll reduce rates accordingly. On the other hand, homeowners with poor credit are perceived as individuals who will most probably file claims under their policy.

Conclusion

Now that you’ve understood how each home insurance is personalized for every homeowner, it’s time to look for the best home insurance for you! Make sure to get home insurance quotes from different insurers to compare your options and find the right one that offers a price that works for your financial situation.

If you’ve been looking for the best home insurance in Orlando, Florida, we’ve got your back! We at Sanford Insurance Center have a policy that will fit your needs and is priced just right. Not only will we provide protection for the home but full replacement coverage for all your personal belongings inside your home. Get a free quote today!