Learn About the Factors That Drive Your Home Insurance Premium

Most homes now serve a dual purpose. It is no longer just a place to relax. American households have become office spaces, learning areas, and even a gym. This transformation is one of the inevitable consequences due to the pandemic. Many employees and students are now spending longer hours at home than ever before.
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American homes today are more prone to wear and tear. Hence, home insurance is a valuable tool in keeping your home safe and secure from constant usage damages. It can protect your home and personal property from natural perils and human-made damages. Here are four factors that drive the cost of your home insurance premiums:

Extent of Coverage
The standard home insurance policy might not cover all your properties, so you might need extra policy coverage. If you possess several luxurious items such as expensive jewelry, standard home insurance might cover it. You need to obtain an additional policy to cover those valuable items. Getting extra coverage will drive the cost of your premium.

Home insurance companies can provide you an option to customize your policy. If you opt to increase the amount of personal liability coverage, your premium will go up also. The added protection and coverages can drive your insurance cost—the more comprehensive your policy choices, the higher the premiums you should pay.

Type of House
One of the coverages under home insurance is the so-called dwelling coverage. This coverage offers financial protection to the structure of your house and anything built into your dwelling place. It can shoulder the expenses associated with rebuilding or repairing your home if it got destroyed or damaged by a hurricane, fire, or any disaster covered in your policy.

Your coverage limit depends on the estimated replacement cost of your home. So, if you own a ten-bedroom house, then you will be paying a higher premium compared to someone who owned a three-bedroom home.

The age of your home is another factor being considered for your premium. If you own a vintage house, you are more likely to pay more home insurance premiums. Old, traditional homes have materials that are expensive to replace. Older houses usually have outdated electrical and plumbing systems that are more vulnerable to wear and tear.

Residential Location
The location of your house plays a role in determining your insurance premiums. If you are residing in a wildfire or disaster-prone area, insurance companies might charge you more premiums. In 2016, an American homeowner paid an average of $1,192 every year for home insurance. However, if you are residing in Louisiana, you will be paying a yearly premium of $1,967. It is the highest average insurance premium across the United States. Texas and Florida follow with an annual average of $1,937 and $1,918, respectively. The main reason for the high premium rates in these states is coastal areas that are more prone to hurricanes. But if you reside in Oregon, you will only pay $659 every year for your home insurance since the state is not susceptible to hurricanes or tornadoes.

Conclusion
Many factors contribute to the amount of premium that you will pay. The extent of coverage, condition of the house, and residential location are the primary drivers in increasing or decreasing your home insurance premium. However, what is important is you do not let your home unprotected from unforeseen perils.

At Desmond Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (859) 491-5100 or Click Here to request a free quote.