The Biggest Factors That Raise Your Home Insurance Rates

By
Home Builder

When buying a home you want to ensure it’s protected from any unexpected damages. This is where investing in home insurance is critical. However, sometimes your rates can increase depending on certain factors. Here are some of the main reasons your insurance rates may rise.  

Your Home Is Valued at a Higher Price

The more expensive your house is, the higher it will cost to insure. This is because it’s more costly to make repairs or rebuild. The price for these repairs will depend on construction costs and the size of your property. Also, your home’s custom details make it look elegant but can’t be replaced by a local contractor. 

Keep in mind renovations increase your home’s value but raise your rates. So, if you install a pool or add a home office, you could be paying more. To lower your premium consider making only functional updates to your property. Also, if your home is valued above $750,000, consider looking into high-value home insurance. 

Your Home in Need of an Upgrade

When you file a claim or renew your policy, the insurance company will conduct a home inspection. If they notice your home needs updating, this can increase your rates. One factor that can raise the price is an older roof. This is because a worn-down awning provides less storm protection. 

Copper or slate roofs last around 50 years, and asphalt shingles last about 20 years. However, if you notice cracking or exposed nails, replace the awning right away. Historical homes also tend to have higher insurance rates. These properties can have some outdated features, such as plumbing systems. Also, antique finishes may be costly to replace. 

3. Your House Has Less Security

If your home has minimal security, insurance providers may take precautions.  To cover the cost of any potential claims, they might raise your rates. So install safety features, like fire alarms or strong locks and deadbolts.

It’s also a good idea to buy a security system that automatically alerts local authorities. Consider investing in smart technology, like video doorbells, to keep your home safe.

Your Credit Score Dropped

When setting a premium, insurance companies often factor in your credit score. Having a lower score can raise your rates. Maintaining a higher credit report shows the insurance provider you're more reliable. For example, if you can pay your monthly mortgage on time, you’re more likely to maintain your house properly. 

To improve your credit score, keep up with your payments and consolidate any debts. Also, aim for a 30% or less credit utilization. Credit utilization refers to the amount of your credit limit you are currently using. 

5. You Live In a Coastal State

Living in areas prone to natural disasters can increase your rates. For example, residents in Key Largo, Florida, may pay up to $5,950 for home insurance. When severe weather causes flooding, insurance companies end up paying higher costs. 

So, to lower your premium consider making wind-resistant upgrades, such as storm shutters. Hurricane windows can also be beneficial for those living near the coast. Along with protecting your windows, be sure to secure your garage door. 

6. You Filed Multiple Claims

When insurance agencies determine your rate, they review your claims history. Suppose you file multiple claims a year; the insurance company will raise your rates. This is likely because they believe you’ll make another claim in the future. 

Another factor that influences pricing is the timeframe in which you file claims. Shorter time frames tend to increase rates. The type of incident you report can even play a role. Coverage related to water damage or theft can often raise your rates.  

Also, the number of claims your neighbor’s file can affect your premiums. If they file multiple claims, it could indicate you live in an unsafe area. 

7. You Choose a Lower Deductible

A deductible is an amount you will pay toward a claim. It’s the money you pay out of pocket before the insurance company helps to cover the expenses. There are two types of deductibles -standard and percentage. Standard is typically a fixed amount of around $1,015 in the United States.  

A percentage is usually used for specific claims, such as hail or hurricane damage. It is a certain percentage of your home’s insured value. So, by lowering your deductible, you can end up raising your insurance rates. 

Why Your Home Insurance Rates Are Increasing

You want to prepare for any severe weather events that could impact your house. This is why buying home insurance is important. However, it can be costly. So, the next time you see a spike in your bills, consider if one of these reasons could be the cause. 

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