Compass

What Determines Homeowners’ Insurance Costs?

by Lorrie French 12/22/2019

Photo by Designer491 via Shutterstock

If you’re new to homeownership, one of your first expenses is homeowner’s insurance. Not to be confused with mortgage insurance, your homeowner policy protects you in the event of a catastrophe.

Factors that Impact the Cost of Home Insurance

The cost of your home is only one factor in an extensive list of how insurance companies calculate premiums. Just like with car insurance, location plays a big part, as does age and construction. Then there’s your credit score and claims history. Here’s a breakdown of the factors that most determine the cost.

  • Location, location, location. Living in a coastal area drives up the price of the home and the price of insurance. If there’s a chance a tropical storm or tidal flood can impact your home, you’ll pay extra to cover. The same is true of homes in tornado alley. However, living next to certain first responders may lower parts of your homeowners insurance. For example, living close to a firehouse usually reduces the cost of fire coverage because fire personnel can get to you sooner. Likewise, living in areas that may be higher risk, such as a high crime area, may increase factors of your homeowners insurance, like damage and theft.
  • Construction materials is another consideration. Brick, stucco, fiberboard, or stone exteriors improve your home’s chances of surviving a fire over wood shakes or wood siding. That old Victorian is lovely, but wood burns quickly, so you’ll pay a premium to cover it.
  • Roof age and composition. Roofs are expensive. A flat roof costs more than a sloped roof, and a roof older than twenty years carries potential storm damage replacement costs. You’ll pay for that. And, just like with siding, you’ll pay more for a wood shake roof due to its potential to catch fire.
  • Homes older than about 40 years cost more to fix when damaged. And, they have older major systems that can break inside walls and under floors causing thousands in needed repairs.

A few other things impact the premium too. If your credit score is low, typically the insurance company asks for more money upfront and a higher premium. You’ll also pay more if you made multiple claims within the last five years. Of course, if you’re a first-time buyer this wouldn’t apply to you. Coverage for your personal property increases with the value of that property. If you own expensive jewelry, several computers or electronics, plan to pay more to cover them.

You can reduce premium costs by installing a security system, taking care of maintenance items, replacing major systems (wiring, plumbing, HVAC) and updating the roof. For more ways to learn how to reduce your insurance costs, ask your real estate professional for advice. Be certain to shop and compare prices and coverage too.

About the Author
Author

Lorrie French

"Where the Accent is on Service”

DRE#00910990

Lorrie is a San Francisco native and has 30 years of experience as a realtor/broker.  She knows the heartbeat  of the city.  From Russian Hill to SOMA from the Bayview District to the Marina, you’ll find her helping buyers and sellers handle their real estate needs.  Lorrie’s expertise in marketing, negotiating, and achieving results could be beneficial to you.  She takes pride on her ability to listen, communicate and most importantly, care about her clients.

  • Realtor designation - 1986
  • Graduate, Realtor Institute - 1992
  • Certified Residential Specialist - 1997
  • Broker designation - 1999
  • Senior Real Estate Specialists - 2005
  • Certified International Property Specialist - 2017

Lorrie is associated with:

  • California Association of Realtors
  • National Association of Realtors
  • Woman’s Council of Realtor
  • Past Director on the San Francisco Association of Realtors’ board
  • Director on the California Association of Realtors
  • Serves on the Legislative Committee and Professional Standards of the San Francisco Association of Realtors                             

She is active in the American Cancer Society, neighborhood associations, and Friends of the Urban Forest.  Her activities include yoga, biking, golf, and walking.

Lorrie attributes her success to experience, market knowledge, professionalism, and excellent communication.  Lorrie believes that buying or selling a home should be left to a professional -- not to chance.  Like with any major investment, one should be careful to seek out the best advice and assistance available. This is where Lorrie stands out; in fact, her track record of proven success and client satisfaction is the best assurance of the same outstanding service you will receive when you buy or sell with Lorrie.  She invites you to contact her and explore how she may assist you in a purchase or sale in the City by the Bay.