Data from the National Association of Insurance Commissioners (NAIC) shows that the average annual home insurance cost in the U.S. is around $1,200. As you'd expect, the actual costs vary across state lines as well as from one insurance carrier to another depending on several factors.
Here's a look at the 4 main factors home insurance carriers typically consider when it comes to house insurance determination.
1. Home Insurance Deductibles
A deductible is the specified amount of money you'll need to pay upfront before receiving a payout on your claim. The Deductible plays an important role in determining the cost of your home insurance policy. In general, a high deductible means lower monthly premiums and vice versa. Keeping this in mind, most insurance carriers recommend a minimum deductible of $500. However, the Insurance Information Institute (III) says that you can reduce your home insurance costs by as much as 25% by simply increasing your deductible to $1,000. However, to avoid overstretching yourself financially, also consider your other related insurance needs when determining your home insurance deductible. More precisely, depending on where you live, you may need separate deductibles for disasters such as earthquakes, hailstorms, or windstorms.
2. Estimated Replacement Cost
The estimated amount of money it would cost you to replace your home is a critical factor in house insurance determination. Take note that your home's replacement cost and market value are two different things. More specifically, the former refers to the amount of money you'd need to build the same house on its original location, whereas the latter includes the replacement cost plus the value of the land on which the house stands.
Home insurance companies typically use their own appraisers to determine this cost. For this reason, you, too, should hire a professional appraiser to do the same regularly. Such appraisals would cost you anywhere from $200 to $400.
3. CLUE Report
CLUE, an acronym for Comprehensive Loss Underwriting Exchange, is a database of all insurance claims made over the last five to seven years, irrespective of their size. In other words, when you file a homeowners insurance claim for named perils such as weather-related damage, fire, or vandalism, your claim will likely end up in the CLUE database and remain there for up to 7 years. This makes the CLUE database a valuable resource for
home insurance companies, especially when it comes to house insurance determination. With this in mind, a typical CLUE report includes the following details:
The name of the insurer
The date of any claims and losses
The type of loss, for example, water, fire, or wind damage
How the insurer settled the claim
The payout amount
The homeowners claim and policy numbers
4. Homeowners Insurance Bundles and Discounts
Homeowners insurance carriers offer various bundles and discounts that you can use to lower your
home insurance rates and premiums. For example, if you buy different insurance products from one insurer, say, your car and homeowners insurance, you may be able to enjoy lower rates, thanks to bundle pricing. In addition to bundle pricing, other factors that determine home insurance rates include:
Loyalty discount programs
Low or zero claim rates
When it comes to house insurance determination, home insurance companies typically consider these factors.
CF&P Insurance Brokers is always willing to take a look at your current homeowners coverage and provide you with a quote for your home. Call us at (925) 956-7700, and we will be happy to provide you a quote.
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