7 Factors That Affect the Cost of Home Insurance

 

Homeowners insurance underwriters have a long list of factors to consider when writing a home insurance policy, all of which go into a formula for determining policy premium costs.  Two of the major factors determining the cost of your home insurance includes the geographic location of your home and how much it would cost to rebuild your home in the event that it's totally destroyed by a covered peril such as an all consuming house fire.

Here is a list of factors that affect the cost of your home insurance:

1.  Location, location, location.  Where your home is located is one of the primary determinants affecting your home insurance premium costs.  In states like Florida or Louisiana, where natural disasters are prevalent, premium costs may be as much as three times as expensive as costs in areas statistically safer from natural disasters such as Oregon or Utah.  Home insurance in North Carolina is the 30th least expensive of the 50 U.S. states.  Other location factors show policies are typically more expensive in urban rather than rural areas and in locations with statistically higher crime rates.
2. Home value and rebuilding costs.  Coverage for repairing or rebuilding your home is a major factor in the price of your home insurance.  Higher priced homes cost more to insure because they generally cost more to repair or rebuild.  These repair/rebuild costs will depend on the size of your home and local construction prices.
3. You'll pay more for more coverage.  Higher levels of coverage bring higher policy premiums.  The value of your personal possessions may be higher than standard policy limits and you may want to raise your limits, making your coverage more expensive.  Liability protection on your policy may be limited to $100K, but experts agree you may want to increase this limit to cover the total amount of your assets.  Consider an umbrella policy for extra protection.  This will add to the cost of your coverage.
4. Age and Condition.  An older home may be more expensive to insure.  Outdated electrical, plumbing and heating/cooling systems may be seen as higher risks by insurers.
5. Your credit history.  Many insurers use your credit history data when underwriting your policy.  Poor credit may mean higher insurance costs.
6. Deductible Amount.  Choosing a higher deductible amount should translate to a lower premium amount.
7. Ask about any discounts available from your insurer such as a bundling discount.  Other discounts may also be available.

What Can You Do to Reduce Homeowners Insurance Costs?

 

Saving money on expenses has universal appeal, especially when you can save on something you're required to purchase.  Statistics show that approximately 95% of all homeowners in North Carolina maintain homeowners insurance coverage, so ways to reduce homeowners insurance costs should be widely welcomed.  We'll present you with a comprehensive list of tips for reducing your home insurance costs starting today.  Choose your Greensboro homeowners insurance policy with the goal of getting the best for the least.  Try these tips:

Seven Ways to Save on Your Greensboro Homeowners Insurance Coverage

1.  Most experts agree that the first and most important tip for saving on any insurance policy is to shop around.  It's recommended that you obtain no less than three quotes from companies rated highly for service and financial stability.  Consult A. M. Best and/or Standard & Poor's for this information.  Consider using an insurance broker who has access and insight into multiple providers.  Price is important but other factors such as service and stability should also figure in.  Shop around when buying a new Greensboro homeowners insurance policy or when renewing your existing coverage. 

2.  An immediate reduction in your homeowners insurance rate can be obtained by simply raising your deductible amount.  Insurance companies typically recommend a deductible of $500, which is the amount you're required to pay our of pocket when you make a valid claim.  Higher deductibles mean lower premiums and raising your deductible from $500 to $1000 could save you as much as 20% on your policy cost, depending on your insurer.

3.  When deciding how much home insurance to buy, don't include the value of the land your house sits on.  Land isn't subject to the same perils as your home and other structures on your property.  Also, calculate how much coverage you need by the cost it would take to rebuild your home rather than its current market value.

4.  Bundling a variety of policies such as homeowners, auto and umbrella all with one insurer can save you as much as 15% on these policies.

5.  Improving your home's security with smoke detectors, burglar alarms and deadbolt locks can save you 5% or more on your home policy.

6.  Most insurers offer a variety of discounts for which you may qualify.  Often, however, you won't know about these unless you ask.

7.  Review policy limits for your personal property coverage to make sure you're not paying for coverage you don't need.

 

 

Does Homeowners Insurance Cover Water Damage?

 

Thoroughly reading through your Greensboro homeowners insurance policy is the best way to learn just what is and what isn't covered in your contract.  It's especially important to understand how water damage is handled, since claims for water damage can often be denied by an insurer due to confusion of what qualifies under a standard policy.

Water Damage Coverage on Your Greensboro Homeowners Insurance Policy

A standard home insurance policy requires that for a claim to qualify for payment, it be a sudden and unexpected loss.  There are additional requirements for a qualified water damage claim.

The source of water damage may be varied.  As a rule, in order to qualify for a claim the water that damages your home must be the result of one of the perils covered by your homeowners policy.  This may include:

• Rain or snowstorm damage
• Plumbing accidents such as burst pipes, accidental overflow of a bathtub, toilet or sink, faulty water-using appliances such as hot water heaters, washing machines or air conditioners
• Frozen plumbing inside the house
• Water damage from fire extinguishment
• Vandalism

From the Top Down, Not the Bottom Up

One way to think about water damage that qualifies for a loss claim is to remember that the damaging water must have never touched the outside ground.  Another way to look at it is that the damaging water must be internal or come from above, never from below.  This qualifies:

• Ground water seepage
• Sewer pipe or water backups
• Flooding

You'll also find that water damage caused by lack of maintenance or neglect will not be covered by your Greensboro homeowners insurance policy.  This means if the pipes in your home freeze and then burst while the home if left unoccupied and the heat was turned off, you won't likely be covered for the loss.

Mold

Mold is insidious and dangerous to your health and often accompanies water damage.  Whether on not your home insurance will cover you for mold removal/remediation costs will be determined by the cause of the water damage preceding the mold development.  If the water damage is covered, the mold removal will likely also be covered.

Flooding

Flood damage can be covered by getting a special flood policy.  Available through your trusted agent or broker, these policies come from a government program called the National Flood Insurance Program (NFIP), which comes under direction of FEMA, the Federal Emergency Management Agency.

What is a Personal Articles Policy?

 

If you're a homeowner, chances are very good that you already have a homeowner's insurance policy covering your home and the personal property in your home against loss from things like fire, storms, lightning strikes, vandalism, burglary and more.

Know Your Limits

It's important to understand exactly what your homeowner's policy covers and what limits are established for each of the benefits provided.  You'll have one limit for a loss claim on the structure should it be damaged or destroyed, and another limit for the personal property found in the home.  This second limit is typically set at a certain percentage of the first limit.

There will also be a limit on the liability coverage your policy provides and a special limit on certain valuables such as jewelry, furs, artwork, guns, collectibles, etc.  This special limit on valuables is separate from the limit on your personal property and should be considered if you have any high-dollar valuables in your home because these special limits are typically relatively low.  A limit of $1,500-$2,500 is not uncommon, which obviously won't go far in compensating you for lost, stolen or damaged jewelry, artwork, furs, etc.

Personal Articles Policy Floater

According to the Insurance Information Institute (III), there are two ways to boost your insurance coverage for high-dollar valuables:

1. Raise the limit placed on the liability of these items found in your standard coverage.  Doing this, however, will only give you a relatively modest amount of added coverage that will still not cover the full amount of most losses.
2. Buy a floater policy, also called a personal articles policy, to more fully cover losses of high-dollar valuables.  This policy will cover all types of losses, including some not covered by a standard homeowner's policy, such as accidental losses.

Personal Articles Policy Defined

A personal articles policy is advised to cover any of your expensive personal property whose loss would be far above the limit of your standard policy's personal property protection.  While jewelry and guns are the items most typically found covered by this type of policy, you may also want to include:

• Fine Art
• Furs
• Silver/Gold
• Collections such as coins, stamps, baseball cards
• Camera equipment
• Musical instruments

These items are typically covered world-wide and claims usually require no deductible.  Items may be individually listed (or scheduled) or a blanket policy may be taken out to cover all your valuables without individually listing them.

What Is Landlord Insurance?

 

Landlord insurance is homeowner's insurance designed to protect homes not occupied by the owner. If you own a house, apartment or condo that's used as a tenant rental, landlord insurance is what you need to protect yourself from the dwelling being the cause of your suffering financial loss from a number of risks. These risks, known a “perils” in the insurance industry, are similar to those contained in a standard homeowner's insurance policy, although the landlord policy is typically smaller in the depth and breadth of its protection.

Differences Between Homeowner's Insurance and Landlord Insurance

While it's possible to buy landlord insurance for your owner-occupied home, it wouldn't be wise since the coverage is lesser in scope and yet likely more expensive in cost. On the other hand, typical homeowner's coverage being carried on a rental property is a definite no-no, since any loss occurring on the property won't be covered and any claim will be denied.

There are three types of landlord insurance policies: DP-1, DP-2 and DP-3. Each contains dwelling protection and liability protection. They may also contain loss of use protection. Additional optional coverage is also available. Here's a brief rundown:

• DP-1 – This is the most basic and lowest-cost landlord insurance. It's a “named perils” policy, meaning that only perils specifically listed (or named) in the policy are covered. Most DP-1 policies are actual cash value (ACV) policies, which means any claims payments for covered property losses may include a calculated amount subtracted for depreciation.
• DP-2 – Also known as Dwelling Fire Form 2, DP-2 is average protection for a rental home and considered adequate for most rental properties. It is also a “named perils” policy, typically covering 18 listed perils similar to those found in the popular homeowner's HO3 policy. Unlike the DP-1 policy, the DP-2 is a Replacement Cost Policy as opposed to Actual Cash Value coverage. This means that depreciation is not factored in when a claims payment is made, thereby providing much more comprehensive coverage. Most DP-2 policies include Loss of Rents coverage, which pays you rent if your tenants are forced to move out while repairs are made to a property damaged by one of the policy's covered perils.
• DP-3 – The best rental property insurance, DP-3 is “All Risk,” meaning all perils except those specifically excluded are covered. This is Replacement Cost insurance and also includes Loss of Rents coverage.

Can You Dispute a Home Insurance Claim Settlement?

Your homeowner's insurance coverage helps protect you from financial loss should your house become damaged or destroyed as the result of numerous perils. The perils in a standard policy typically number about seventeen. These extend from something that may be minor, such as vandalism, to something that is catastrophic, such as a house fire that totally destroys your home and all your belongings within the home.

There's much more contained in your homeowner's policy than just structure and personal possessions coverage, including liability should someone get injured while on your property or in your home and later bring a lawsuit against you for damages.

Filing a Homeowner's Insurance Policy Claim

When something happens, you file a claim with your insurance company and await getting reimbursed within the limits and provisions of your policy. But what if the claim you submitted isn't settled to your satisfaction or gets denied completely? Unfortunately, this is not an uncommon occurrence and can be incredibly frustrating. There are a number of reasons an insurance company may deny a claim you've filed and that you think should be covered. Some of those reasons include:

• The damage you've reported isn't covered in your policy
• The damage you're claiming wasn't correctly reported
• The replacement cost of the damage you're reporting is less than the amount of your deductible

Disputing a Home Insurance Claim Settlement

If you believe your claim was unjustly denied or the payout amount was less than you should have received, you can dispute these results. While you may choose to hire legal assistance, this may be expensive. Many will choose to dispute a Home Insurance Claim Settlement on their own. Here are the steps to take:

1. Read and understand your coverage. You may have filed a claim for something you thought was covered but wasn't.
2. If your claim is denied, review the insurer's documentation explaining their disapproval. Contact your agent if you have questions. Assemble any documents proving why you're entitled to your claim.
3. Send a letter to the insurer's claims adjuster explaining your position. Include any evidence you have to show the claim was improperly handled. Request the adjuster review the claim and respond within a stated time frame. Send a courtesy copy to the adjuster's superior.
4. Request the insurer send a second adjuster to conduct a second inspection.
5. If the insurer won't change their position, file a formal complaint with your State Insurance Department.

Woodpecker Damage: Does Insurance Cover It?

There are lots of things that your standard homeowner's insurance policy covers. Also known as an HO3 Special Form, the HO3, which is what most homeowners carry for their homeowner's insurance coverage, is an “open perils” policy. This means that it covers all perils except those specifically listed in the policy's exclusions section.

A typical exclusion found in most HO3 policies is for: “Birds, Vermin, Rodents, Insects,” so, if you're wondering if woodpecker damage is covered in your policy, the answer is likely, “No.”

The reason woodpecker damage, or any other bird, vermin, rodent or insect damage, isn't covered by homeowners' insurance policies is because said damage is considered by insurance companies to be preventable. Their position is that prevention is possible by observing proper maintenance procedures.

Insurance Isn't For The Birds!

Some serious damage can occur when a persistent bird like a woodpecker decides to go to work on your home. He can drill holes through your siding, your window frames or your roofing. These holes can allow water and insects entry to your home and fungus and mold won't be far behind if left untreated. In addition to surface damage, structural damage can actually occur if woodpeckers spend significant time working on support beams.

While your homeowner's insurance doesn't cover woodpecker damage, there are things you can do to fix the damage and to prevent the same thing from happening again. Getting rid of insects, which woodpeckers feast on, can be a big help. Woodpeckers, however, use the noise that their pecking makes as a way of attracting mates, so different strategies need to be undertaken to get them to leave your property and go somewhere else. One idea that's worked for some is to place imitation owls or hawks in the areas where the birds have been causing trouble.

What About an Endorsement or Rider?

In most homeowner's insurance policies, even perils that are contained in the exclusions section can be covered by adding an endorsement (or rider) to the policy or adding an additional policy. Two common examples of this are the addition of flood insurance and/or earthquake insurance to your standard coverage.

An endorsement to cover the damage created by “Birds, Vermin, Rodents, Insects,” might be possible to obtain from some insurers for a price, since coverage for just about any peril can be negotiated for the right premium increase. Ask your agent.

What Can I Do to Lower My Homeowners Insurance Premiums?

If you're like most homeowners, your home and personal possessions represent your largest investment. You need to protect that investment, which is why you're willing to pay homeowners insurance premiums to an insurance company who will extend that financial protection to you for a price.

If you have a mortgage on your property, the mortgage company requires that you take out insurance coverage to protect their financial investment in your home. If your home is destroyed, they want to know they'll be paid back for the amount outstanding on your mortgage loan.

A Major Problem 

According to a recent survey by research firm Marshall & Swift, fewer than half the homes in the U.S. are covered by enough insurance to rebuild them after a major disaster occurs. They go on to say that approximately 60% of American homes are worth more than their insurance reflects (by 17%). This is an improvement, however, from 30 years ago when, according to the Insurance Information Institute, 73% of homes were underinsured by an average of 35%.

There's no doubt that a certain number of these homes are being underinsured for the purpose of lowering the homeowners insurance premiums. Another explanation is that many homeowners only carry as much homeowners insurance as is required by their mortgage lender, equal or greater than the current amount owing on their mortgage loans.

If you fall into this category, there's a good chance that your home is underinsured. The cost difference between the amount owed on your loan and the amount that would be required to rebuild your home, including construction materials and labor, is likely significant.

Saving on Premiums

Underinsuring your home in order to save on premium dollars is only smart if you know for a fact that you'll never need to make a major claim on your policy. And, of course, you couldn't know this absolutely. As the old saying goes regarding insurance: “It's better to have it and not need it than to need it and not have it!”

There are, however, other ways to lower your homeowners insurance premiums that are safe and make good sense. Consider these:

• Shop around for the best deal. Use a broker with multiple companies from which to choose
• Bundle your home, life and auto policies with the same company
• Explore every discount available
• Choose a higher deductible
• Improve your home's disaster resistance
• Add home security features

Homeowners Insurance: Options That Cover Your Assets

When taking out a Greensboro homeowners insurance policy, you'll be presented with lots of options of ways to fine-tune your protection to best fit your specific needs. Sometimes these various options can seem overwhelming and are best handled with the assistance of a trusted insurance broker who can help guide you along the path of obtaining the best coverage for the best price.

At its most basic, your Greensboro homeowners insurance coverage will be designed to protect your investment in your home as well as protect the financial risk your mortgage lender carries in the event your home should be destroyed as a result of a covered peril.

What Your Policy Covers

Homeowners insurance policies are made up of a variety of coverages meant to protect you financially. If your home were totally destroyed as the result of a house fire, your dwelling coverage should be sufficient enough to cover the costs of rebuilding your home back to its pre-fire state, according to today's building costs. If your dwelling coverage limits are too low, rebuilding your home after it's been destroyed will mean dipping into your own personal assets to pay the difference between the costs for rebuilding and the payoff from your insurer.

Personal Possessions

Your Greensboro homeowners insurance policy should also have a section that provides coverage to protect you from financial loss related to the damage, destruction or theft of the personal possessions in your home. It's important here to have limits high enough to cover the repair or replacement of these possessions at today's costs. You may have the option to choose coverage that pays true replacement costs or actual cash value (replacement cost minus depreciation).

Certain high-value personal possessions such as jewelry, artwork, furs or collectibles will have specific payoff limits on a standard policy. Adequately covering these items (and your assets) will require buying additional coverage by way of a rider (or floater).

Liability Coverage

An often overlooked but extremely important part of standard homeowners insurance policies is the liability coverage. This may, in fact, be your biggest asset protection in your homeowner's coverage, especially if you have risky items on your property such as a swimming pool, a treehouse or a trampoline.

Liability coverage protects you against financial loss related to someone becoming injured or killed while on your property. It even covers you if your dog bites someone off your property.