There is a constant doubt when you have an insurance policy that you may be paying too much. You may feel as though you are not getting the best deal you could and spending money best used somewhere else. While it is important to save money on home insurance, it is also important to know what is affecting your home insurance rates. Knowing how your home insurance premiums are calculated can help you better understand how much you should be paying for home insurance.
For example, factors that could be influencing the cost of your home insurance premiums include:
- Location
- Value of the home
- Coverage limits
- Claims history
- Credit score
Value of Your Home
Every home is different, meaning every home’s insurance needs are different. Your home insurance rates may be different from your neighbor’s because your insurance needs are different. For example, you are generally recommended to carry 100% of your home’s total replacement cost value in home insurance. The total replacement cost value of a home isn’t its market price, but instead how much it would cost to rebuild the home after a disaster.
This means that your premiums may change depending on how high or low your home’s total replacement cost value is.
Coverage Limits
Be certain to look over your policy to understand what insurance coverage you need. There are some optional coverages under home insurance that you may not need and cutting them out could save you money. On the other hand, not having enough insurance can leave you open to financial loss in the future when a claim doesn’t cover everything.
Compare Quotes
If you are unhappy with the amount you are paying for home insurance, it can help to compare quotes among multiple insurers. Simply receiving quotes won’t affect your credit despite common misconception. This is why it is in your best interest to compare quotes between insurance providers if you want to know what rates others are offering for the same type of insurance.
Ask About Discounts
Also keep in mind that most insurance providers offer varying discounts to their clients. Ask about discounts you may qualify for such as:
- Bundling home and auto
- Loyalty discounts
- Claims free discounts
You can also save money by living in a gated community, making home improvements, having a burglar and fire alarm system, and all around making your home safer.