Like car insurance policies, the rate of homeowner’s insurance depends largely on the location of your home. The community where your home is situated poses some risks that are considered by most insurance companies. Crime rates vary from one community to another. The accessibility of the fire station, the police department as well as the quality of the water supply are all factors that are considered in computing the cost of home insurance policy offered to you.
Insurance companies must be able to determine the type of protection that the homeowner needs. Apart from the factors mentioned above, here are the other things that they consider in a list:
•   Type of Home Construction
If the structure of your house is framed, then you are likely more at risk to losing everything when it catches fire or when a hurricane sweeps the entire neighbourhood out, compared to those who have brick houses. When planning to build your house, you might want to consider the materials that you’ll be using carefully. Some of the high-quality materials may be expensive, but they could mean less insurance premium payments for you.
•   Age of the House
If your house has been up for a couple of years before you decided to look into getting it insured, you should be prepared to pay more for the home insurance premium. If you’ve just moved into your new house, you may be qualified for the discounts and promo. There are also some insurance companies that may require owners of older home to update their plumbing, heating and wiring system.
•   Local Fire Protection
Did you know that the distance between your home and the nearest fire department is also seen as a factor in determining how much your fire coverage cost will be? Insurance companies want to make sure that you’ll be able to get immediate help whenever there is a need for it because it will mean minor damages to your property; thus, lesser money will be necessary to repair and rebuild the part of the house that has been destroyed.
Why are these factors even considered? Insurance has to pre-compute the value of your property before anything happens to it. More than that, they also have to look at how much your property will be worth in the next five, ten or even twenty years. Insurance policies are designed to provide homeowners with the security that they need to ensure that they have enough money to cover the expenses required to repair or rebuild the house.