In 2021, the average cost of homeowners insurance in the US with $250,000 in dwelling coverage is $1,312 per year. However, home insurance rates vary greatly due to several factors, based on you, your home, and your location, among many other things.
If you’re shopping for insurance, you need to understand what affects the value of homeowners insurance so you can make the best decisions for your coverage. Let’s take a look at the biggest factors that will affect your homeowners insurance premiums in Florida.
Replacement Cost
The replacement cost of your home is the biggest factor in determining the value of your homeowners insurance policy. This is the cost of construction materials and labor if you needed to rebuild your home after a total loss.
Some people may confuse this with the home’s market value. However, the market value takes the land, neighborhood, view, distance from local amenities, and other factors into account. The replacement cost is only focused on what it would cost to rebuild the home itself.
Insurance companies use replacement cost estimators to figure out the initial replacement cost. This is mostly based on the national average of similar homes. It can also split them into different classifications (standard, average, above average, premium, and custom) to get better estimates. The more your Insurance Agent knows about your homes custom upgrades and renovations, the better, so you can know that your home is covered adequately.
The cost estimator also uses data from county records to factor in specific components such as the number of bedrooms, bathrooms, the construction type, as well as the square footage.
Age and condition also play a role in the replacement cost. Older homes with more elaborate details cost more to replace, leading to higher premiums. Homes made of sturdy materials such as bricks tend to have lower premiums than more flammable materials like wood or frame construction.
If you remodel parts of your home, you might be able to save money on your premiums as well. Updating old roofs, aluminum wiring, and plumbing issues will definitely help. In addition, upgraded appliances and structural improvements could also lower your insurance cost. When your Agent asks if you’ve had any updates, don’t think that a “wiring update” has to be a complete re-wiring of the home. Updates to fixtures, GFCIs and breakers completed by a licensed electrician could count! The same goes for plumbing. New water heaters, toilets, sink/faucets, and supply lines are all valuable updates to your home.
Policy Decisions
The options you choose for your policy also impact the value. One important selection is your deductible, (the fee that the policy holder pays before the insurance company responds to a covered loss). A higher deductible usually leads to a lower annual premium. This can be a good way to save money if you are claim-free. In years past, Florida policy holders may be used to 2% Hurricane/Named Storm Deductibles and a flat $1,000 All other Peril Deductibles. We are not seeing that quotes with 5% Hurricane/Named Storm Deductibles and $5,000 Flat Deductibles can save hundreds to thousands of dollars on policy premium!
In addition, the amount and types of coverage you choose affect the premium. You should choose coverages that meet your needs and budget while protecting your home and personal belongings. Coverage B is interesting in Florida. If you don’t have any “Other Structures” on your property it may not be needed at all! Personal Property Coverage is also a preference. For a primary or full-time residence, we recommend 40-50% of Coverage A to suffice for Personal Property Coverage. Most people grossly underestimate the value of ALL of their belongings!
For a brief review of what’s covered on a Florida Policy, check out this three minute video. Each coverage line has its own uses and limitations, which you should pay careful attention to while choosing.
Small claims that you might have filed in the past can also impact your rates. Even filing multiple small claims can add up to be as bad as one large one. Be sure to think about the impact of these claims if you wish to file any. They typically stay on your “insurance record” for at least 3-5 years.
Weather and Water
Homes that are close to water tend to have higher insurance premiums. This is primarily due to the added risk that comes along with insuring this type of location.
However, it’s important to note that flood insurance is not included in homeowners policies. FEMA Advertises that if you live where it rains, that you need a Flood Insurance Policy. It is a large misconception that just because your mortgage company doesn’t require you to have Flood Insurance that you’re not in a flood zone. Every property is in a flood zone, it’s just that some are more “preferred” than others. FEMA is making some major changes to their rating October 1, 2021. It would be a great time to get a Flood Quote and take advantage of insuring your property completely for only a few hundred dollars a year.
Safety
The location of your home may also affect your premiums due to the neighborhood crime rates in the area. Dangerous neighborhoods could face a homeowners insurance increase due to the possibility of crimes such as theft or vandalism.
However, if you are located in a safer location, such as near a fire station or in a gated and/or guarded community, you may have lower premiums or be able to take advantage of discounts. You can also help keep your home safe by adding a security system, upgrading doors and locks, smoke detectors, and motion-sensing security lights.
Insured’s Factors
Did you know that the homeowner’s personal information is almost as important as the property when determining homeowners insurance quotes? Your marital status actually affects your insurance premiums. Married couples are seen as lower risk than single homeowners. They tend to file fewer claims and be considered more responsible. This usually leads to lower premiums if you are married.
Many insurance companies also take your consumer score or credit history and credit-based insurance score into account and come up with what is called an “insurance score.” There are a variety of ways that these can be factored in, but the bottom line is that having a good credit history usually leads to lower premiums as well. It’s important to note that shopping for insurance does NOT affect your credit score.
Additional Factors
There are some small factors can add up as well. For example, some insurance companies may deem certain dog breeds as “dangerous.” If you have a dog that is one of these breeds, your insurance company could exclude the breed from coverage.
Additions to your home or yard, such as pools, trampolines, and even some types of sculptures, can definitely constitute added risk. It’s important to know what is required by your insurance company for safety measures and features such as fences to keep your policy in good standing.
Get the Homeowners Insurance That is Right for You
When you’re choosing homeowners insurance, it’s important to weigh both your coverage needs and the value of your policy. Part of this includes understanding the factors that play into determining your premium.
Start by getting a homeowners insurance quote from Harris insurance today and continue the coverage with one of our Licensed Insurance Agents to be sure you’ve got the best valued policy possible. We are the Florida Property Insurance Experts since 1965!
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
