According to the National Association of Insurance Commissioners (NAIC), the average annual homeowners insurance rate in the U.S. is around $1,200. However, the actual rate varies across the country depending on named perils. For example, data from the Insurance Information Institute (III) shows that the average annual homeowners premium in Texas is $1,893 every year, which is significantly higher than the annual national average. One reason behind such high rates may be the frequency of weather-related disasters, particularly hailstorms and tornadoes.
The following are a few factors that can significantly affect your homeowners insurance rate.
1.Home Value
In general, a larger home value will attract higher premiums and vice versa. For example, data from the National Association of Insurance Commissioners (NAIC) shows that homeowners with home values of $500,000 and above pay average premiums of $2,149 every year, an amount way higher than the average industry rate. Thus, if a high-value property suffers a loss caused by a named peril, its home insurance claim would be higher than the average claim.
Note that your home value can depreciate over time due to several factors, including normal wear and tear. When this happens, your home insurance rates will likely rise, especially if your house is in poor condition. To avoid paying higher rates, you must perform regular repairs to keep your house in good condition. Also, make sure to notify your insurer whenever you perform any repairs.
2. High-Risk Possessions
According to the Center for Disease Control and Prevention (CDC), drowning is one of the leading causes of accidental deaths in the U.S., with about ten people dying every day from both boating-related and non-boating related incidents. Property such as boats, swimming pools, trampolines, hot tubs, and outdoor spas put your home at a higher risk of accidents, injuries, and in worst cases, death. For this reason, you will have to pay larger homeowners insurance rates to cover all of these properties, as mentioned earlier, or purchase umbrella insurance to cover the gaps.
3. Location of Your Home
Usually, homes located in areas prone to natural disasters attract higher insurance premiums. For instance, homes in wildfire-susceptible regions such as Texas are at a higher risk of fire, and therefore, typically pay higher home insurance premiums. The same applies to homes located along the coastline or near a water body. In contrast, homes near a fire station or fire hydrant have significantly reduced homeowners insurance rates as the comparative risk of fire damage is lower.
4. Types of Pets
In general, aggressive dog-breeds are more likely to cause bodily injuries to your visitors and your loved ones. In 2018, there were about 38 deaths caused by dog-bites, as reported by the National Canine Research Council. Hence, you might have to pay higher homeowners insurance rates if you own an aggressive pet. Nevertheless, training your pet and notifying your insurer can help lower the rates, as long as you can prove that the risk of injuries has been substantially reduced.
5. Insurance Credit Score
Insurance companies often consider your credit scores to determine whether they should sell you insurance and if yes, then at what rates. However, the way they determine your eligibility based on your credit scores will vary from insurer to insurer.
As per the Texas Department of Insurance (TDI), your current outstanding amount, the number of loans and credit accounts you have, and the history of your past due payments are some of the several factors that your insurers will consider while evaluating your credit score. The credit scores will affect your premiums as people with low credit scores are deemed potential financial risks by insurers, resulting in higher rates.
These are some of the several factors that play an essential role in determining your homeowners insurance rates. Do you have further questions about homeowners insurance? Contact the experts at Mike Leonard Insurance Agency in Texas. We can connect you with our top insurance carriers, including Kemper, MetLife, Nationwide, Travelers, Safeco Insurance, Progressive, and American Strategic Insurance, to find the coverage you need.