You probably already know that your homeowner’s insurance rates are influenced by a number of factors, including the location and size of the home, the value of your possessions, and features like swimming pools or trampoline. However, there are plenty of other things that can drive up your rates that you might not expect.
If your homeowner’s insurance bill is higher than you expected this year, and there haven’t been across-the-board rate increases, look into whether any of these factors is the culprit.
1. Changes to the Neighborhood
It’s bad enough that your neighbors keep you awake with their wild parties, but they can also influence your insurance rates as well. If there is an increase in claims in your neighborhood for fires, robberies, etc., your insurer is likely to increase your rates due to your riskier neighborhood. Increases in local building rates, as well as changes in weather patterns that lead to more destructive weather can also cause a spike in your premiums,
2. Your Pets
Your family dog might be the sweetest, gentlest creature in the world around the family, but if he has a bad day and bites someone, you can probably expect to see an increase in your insurance bill. Dog bites are the most common insurance claims, and if you own a dog breed that has a tendency to bite, you could have trouble getting covered in the first place — and you’ll pay more when you do. This doesn’t mean that you can’t have your favorite breed if you have your heart set on one, but you need to expect to pay more for insurance coverage.
3. Your Credit
Your credit score doesn’t just determine whether you can get credit or take out a mortgage. It can play a significant role in your insurance premiums. Insurance carriers equate poor credit with a higher risk of a claim, so customers with sketchy credit histories pay more. Expect your insurance carrier to run a credit check at least annually, and adjust your bill accordingly.
Adding on = bigger house which = bigger insurance premium. If you build an addition to your house, or renovate any existing space to increase the square footage of the home (i.e., converting a garage into an office or family room) then you need to call your insurance agent and to revise your policy. If you don’t, you could be out of luck if you ever need to make a claim on that portion of the house.
5. Structural Changes
Adding features like balconies, lofts, or spiral staircases to your home are attractive, but they can also increase insurance costs. Anything that can increase the chances of falls or injuries can cause rates to go up. And it’s not just aesthetic changes that can increase rates. Features like wood-burning or pellet stoves can also drive up rates, thanks to the increased risk of fire.
If there is one factor that you cannot do anything about, it’s time. As your home gets older, and the appliances, wiring, plumbing, and structural elements age, the risk of claims increases. Updating and replacing these features can help keep your rates low, so pay close attention and proactively maintain your home to prevent both insurance increases and damage.
7. Certain Types of Claims
It’s no surprise that making claims on your insurance will increase the rates. Even if the insurance company doesn’t pay out, there are costs associated with processing the claim, and those are passed on to policyholders in the form of higher premiums. Making multiple small claims on your insurance is certain to drive up your premiums (or even lead to policy cancellation) while claims related to water damage and slip and fall accidents are also notorious for increasing insurance premiums. If you are considering a claim, find out the cost of the repair before you contact the insurance company. A repair that is only a little more than your deductible might be worth paying out of pocket for, to avoid a long-term rate increase.
8. Opening a Home Business
Finally, starting a business in your home will increase your insurance premiums. Businesses typically aren’t covered under standard homeowner’s policies, and a separate business insurance policy is often a better choice. If you choose to go the homeowner’s insurance route, understand that the increased risk of burglaries and personal liability will drive up your insurance costs.
To help keep your insurance bill in check, discuss your options with your agent each year. Review your coverage and make adjustments as necessary (such as increasing your deductible to keep payments down) and don’t be afraid to ask for discounts or shop around for new coverage. When you do, you can usually avoid huge spikes in your bill.