As we approach Hurricane Season with a tropical storm on the forecast, it’s only natural that Homeowner’s insurance should come to mind. If you’re shopping for a new house, home owner’s insurance is also an important consideration when determining your budget because it will impact your monthly bottom line. Typically you can elect to pay your policy in an annual lump sum or have it have broken up over the course of 12 months and paid by your mortgage’s escrow account so that it will be rolled in as part of your monthly mortgage payment. Like a mortgage, homeowner’s insurance is something that’s worth shopping around for. The average insurance premium is $952/year. You want to make sure that you have adequate coverage and that you’re getting the best deal available. Realtor.com demystifies the formula behind why home owner’s insurance costs what it does. Keep these pricing factors in mind to make sure you’re getting the best rate available.
1. Your Home’s Age & Condition
The age of your home and all of its major systems such as plumbing, electric and HVAC are considerations. The good news is that new construction is likely to save you money as many of these systems are protected under home owner’s warranties and are less likely to develop the issues that can plague older homes.
2. The Cost/Square Foot of Rebuilding Your Home
Since the purpose of homeowner’s insurance is to potentially rebuild the damaged portion of your home, the current price/SF is very relevant. This price is easily determined with new construction.
3. Probability of Homeowner’s Claims in Your Area
If you are in a common tornado path or hurricane-prone area, you are likely to have higher premiums because there is an increased risk for potential damage. Of note in Charleston, be sure to inquire if the home you’re interested in buying is in a flood zone and if so which one. This can greatly impact the cost to insure your home. Natural disasters like floods or earthquakes are excluded from standard homeowner’s insurance so this coverage is typically an additional cost.
4. Your Credit History, Age & Personal Information
All of your personal demographics from credit score to marital status can impact your policy cost. The frequency of claims that you have submitted on prior policies can play a role too so be sure to save those occurrences for when it is truly necessary! The higher the credit score and the fewer the claims filed, the lower the rate.
5. Whether Your Home has Potentially Risky Recreational Amenities
Amenities like pools in your yard can drastically increase the cost of your homeowner’s policy. A great benefit of new construction communities is that they typically have neighborhood amenities for you to enjoy, saving you the hassle and cost of maintaining and insuring your own. Trampolines are also known to increase price quotes. Certain large breed dogs can drive up quotes too.
6. Rising Home Prices
The higher the value of your home, the higher your premium will be.
7. Your Home’s Safety Features
Safety features can equal insurance discounts. Things like storm shutters, security systems and carbon monoxide detectors can all save you money every month. Most builders have a great selection of safety features that either come included or can be added to your new home for reasonable costs.
After you’ve selected your homeowner’s insurance and closed on your new home, keep in mind that it will benefit to shop policies on a yearly basis. Insurance companies are often hungry for new business and will be more than happy to compete with their rates. Still shopping for a new home? Grab the latest issue of The Guide at any of these Charleston area locations.
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