Ever wonder how your home insurance premium is determined?
Generally speaking, your home insurance premium is based on your individual risk factors. The more risks you face, the higher your premiums will be. But how does your insurance company determine your risk? Here are some of the factors that your insurance provider takes into account.
Your Age and Martial Status
Insurance companies typically view young and unmarried homeowners as riskier to insure. This means that if you’re young and single, then your home insurance premiums are most likely going to be higher than your older, married, or better-established neighbors.
Fire Protection Class
How close you are to a responding fire department, or even what Public Protection Class that fire department has been given by ISO, determines how much you can be charged for insurance. Communities are classified from a 1 (the best) to 10 (the worst). Several factors go into determining this including water distribution, fire department preparedness, and fire alarm facilities. A perfect score is a 1, which both Austin and Cedar Park now have. The most significant benefit of the PPC program is its effect on fire losses. The better the fire protection, the lower the fire losses, which then results in lower insurance rates. PPC ranking are reevaluated quarterly each year and can go up or down. An insurance company can decide not to use a PPC ranking system, but they will implement their own version in its place. Some even factor in how close a property is to a brush fire hazard (think Steiner Ranch or the Great Hills area)
The big bad wolf easily blew down the straw house, and the wood house in the 3 Little Pigs, but was not able to blow down the brick house. With differences in construction types of homes, comes different insurance ratings for those homes. A wood or frame house, will cost more to insure than a brick veneer, or even solid brick house. Age of the dwelling also plays a part in determining how much you pay for insurance. A brand-new house will have a lower rating, and more policy credits than a home built 20, 30, or more years ago. Roof type and age of the roof is also becoming a leading factor in your insurance premium. If you have a brand new hail resistant metal roof versus someone with a 25 year old shingle roof, you are going to get a lot better rate.
Location, Location, Location
Another factor is area, or even regional claims. Remember that big hail storm from March 2017 in the Ft. Worth area? Don’t believe that affected you? Guess again. Regional losses are taking a toll on companies and they are having to increase rates across the state to compensate for large payouts in small areas.
These are just o few of the many factors that can affect your home insurance premium. If you’re curious to know more about your individual risk factors, contact your insurance provider. If you are looking to find the best home insurance for your needs, turn to the professionals at Reata Insurance Group. Our team is ready to assist you with all your insurance needs. Contact us to get started today.