Waiting to find out your home insurance rating and subsequent premium information can be nerve-racking. The annual or monthly premium amount that you will be charged is so important, it can even mean the difference between buying the home of your dreams and settling for less.
But home insurance rates don’t have to be mysterious and mystical. You can actually get a sense of your potential premium if you know what actually does and doesn’t matter when it comes to premium rating. In order to help you get better acquainted with the rating system, let’s debunk a few myths surrounding home insurance rating.
1. Pets have nothing to do with premium: It’s true that Fluffy, Rover and Goldie may have absolutely no impact on your home insurance rating, but if those names belong to certain breeds of dog, it actually may. Some dogs, with the reputation for extreme owner protectiveness, may be viewed by your home insurance company as a greater potential liability and thus may drive your rates higher.
2. If I’ve had claims, my premiums will rise: Whether you are facing home insurance renewals, or a brand new policy on a new residence, you might automatically assume that your past claims will affect your premiums. In truth, that isn’t always the case. If your past claims indicate that you might be a higher risk due to your lifestyle or behavior, then yes, your rates may be affected. But claims that arise from natural events or incidents you could not prevent or guard against may not affect your rates at all.
3. The claims experience of other homeowners has nothing to do with my rates: Insurance companies must look at you as an individual when underwriting your home insurance policy. They will take into consideration things such as your experience, the age and location of your home and the features of your home (such as swimming pools and outside buildings). In many ways, underwriting a home is like trying to divine the future, and one way to accurately do that is to look at the claims of other homes in the area. While certain owner-specific claims experience isn’t applicable, environmentally prompted claims, as in hurricane or wind damage, can indicate the future claims experience of others in the area.
When planning your home insurance moves and working on budgeting in your premiums, remember that it’s best to deal with concrete facts than hearsay. Contact your agent and talk to him or her about your home insurance rating concerns and let them help you separate fiction from finance-impacting fact.