Homeowners insurance is instrumental in offering financial protection against damages or losses that may occur to and in your home. Homeowners insurance policies vary as do the costs of those policies, which is why it is essential to understand how home insurance costs are calculated.
Factors of Calculating Home Insurance
There is not one set practice that insurance carriers use to calculate the price of homeowners insurance. Insurance premiums are typically determined by factors such as the location and value of your home. Insurers generally use a proprietary home insurance calculator to set home insurance rate increases or decreases, which will then determine how much you will pay.
Additionally, some factors that insurance carriers might consider when determining home insurance premiums include the following:
- Replacement cost
- Square footage
- Area claim history
- Area crime rate
- Personal claim history
How Do I Lower My Insurance Premium?
Homeowners insurance costs often fluctuate, making it difficult to determine an exact formula for calculating homeowners insurance. Paying a higher deductible—an out-of-pocket cost you pay after filing an insurance claim before coverage kicks in—may lead to a lower premium. Preventive actions, such as installing a security system, may also lead to discounted insurance costs depending on your carrier.
Additionally, bundling insurance policies may lead to discounted rates. For example, having a homeowners and auto insurance policy with the same insurance carrier could save you money on premiums. It is also more convenient for policyholders as their policies are kept in one place instead of having policies with multiple insurance providers.
Do I Need Homeowners Insurance?
Homeowners insurance is not required by law in California, but having a policy is essential for the protection of you and your home. The right policy can limit significant costs following an accident, regardless of where your home is located or your home’s value. You may also need additional protections for your home, such as an earthquake insurance policy. Contact us today so we can help ensure that you’re adequately insured.
If you live near Santa Rosa, California, be sure to contact RCU Insurance Services with your questions about calculating homeowners insurance policies. Contact us today at 707-576-5115 to learn more.
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This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.