subject: What Makes the Homeowners Insurance Rates Rise? [print this page] What Makes the Homeowners Insurance Rates Rise?
The Texas Department of Insurance, one of the state's largest insurers, hiked homeowners insurance rates by around three-times on May 29, 2010. The customers would now have to pay 35%, instead of the 13% they were paying till May. Various Dallas-based homeowners will suffer due to this decision.
Homeowners insurance is a type of muti-line insurance that offers coverage not only for the building but also the contents of the home. Personal liability or personal insurance can also be covered under this plan. Insurance rates differ from company to company and various criteria are used for determining the rates.
Factors Used for Determining Homeowners Insurance Rates
Nature of Construction: If your house is a framed one, you are likely to pay more for your home insurance. Insurance for brick houses is usually less expensive.
Age of the House: If your house is newly-built, you could get lower rates and could also become eligible for certain discounts. However, people with older houses have to update their homes with certain facilities in order to get discounts.
Coverage Amount: The coverage will also decide the rate of the premium you are required to pay for home insurance.
Fire protection services: The distance of fire services from your house also determines the premium rate.
Amount of deductibles: The higher the deductibles, the lower will be the premium rate and vice versa.
Homeowners Insurance: What Makes the Rates Rise?
Sometimes despite careful analysis of the above factors, the customer is unable to lower his premium. Although there might be factors that are beyond a customer's control, there are others that can be monitored to ensure lower premium rates, such as:
Filing minimal claims
It is preferable to pay for minor damages than to claim for every small bit of repair and renovation. This is because multiple claims are likely to increase the premium, while most insurers reward for the length of time that no claims are filed. Leave the filing of claims for major repair work.
Pay taxes on time
The late payment of taxes will have a two-fold negative effect. On the one hand, you will suffer from an additional tax fee, while on the other, your insurance rates will go up. An insurer will consider your late tax payment as a risk factor and would consider raising the premium to compensate.
Claims on your house
Even if you have not filed too many claims, it might be possible that the previous owner of the house had been filing multiple claims. Any house with a history of multiple claims is considered as an unsafe property and you will be penalized for this in the form of a higher premium.
Low credit ratings
Your credit score and credit history, which can easily be accessed from any one of the three credit rating agencies in the US, play a crucial role in an insurer's decision regarding your policy. Find out what affects your and work to improve it before seeking insurance. Your credit scores are likely to suffer due to various reasons like not paying your bills regularly.
For in-depth information on the various insurance plans and on getting a good deal, www.homeinsurance.org
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