Demystifying the Cost of Homeowners Insurance

Searching for a new home? You're likely also searching for the best mortgage, too. But first time home buyers often leave their homeowner's insurance as a last-minute thought - yet it is as critical a step as finding the right home or the right mortgage.

The cost of your homeowner's insurance significantly impacts what you pay for your home. Over the lifetime of your mortgage, whether that's 10, 15 or 30 years, homeowner's insurance premiums can add up. Those who opt to wrap premiums into the mortgage payment may never really notice the impact, but a comparison between policy offerings can make a big difference.

To get the most value for your insurance dollars, consider some of the factors insurance companies analyze when offering you a quote:

Location, location, location:

The neighborhood you choose makes a very big difference in insurance cost. Variables like crime rates, proximity to fire station and fire hydrants, weather patterns and floodplains all impact the cost of your premium.

If your home search has you torn between two or three different options, check with your agent. They have insight into a series of key metrics that will impact your monthly costs, such as finding that you are in a floodplain even when you don't have a stream near your backyard. Take advantage of the expertise a reputable agent can bring to your decision-making.

The home, so sweet:

You've narrowed the search down to two homes. You love them both, but even if they are the same price one will cost less over time. Talk to your agent before deciding, as he or she can chime in on the cost to insure each property. It all comes down to replacement value, so consider:

  • The age of the home. Often, a newer home is less expensive to insure because the systems are up-to-date and less likely to fail. Other times, an older but recently updated home may actually be less expensive. Confusing? That's where an agent can help.
  • Construction materials. Brick and stone are generally less expensive to insure than wood, and a steel roof often less expensive than shingles.
  • Safety features. Alarm systems and smoke alarms, just to name two safety features, have an enormous return on investment.

Previous claims filed and your credit rating:

You know that your mortgage rate is based on your credit score, but did you know your insurance rate is, too? Just like other kinds of insurance, homeowner's insurance rates can also be impacted by previous claims.

Having an agent on your side can make a big difference in the rate you ultimately are quoted. Allow us to help, and we'll identify the best solution for your particular situation.

Learn more about Homeowners Insurance and get a free quote!

National GeneralArroweadUniversal Insurance CompanySCUThe HartfordHanover Excess & Surplus, Inc.