How much does it cost to insure my home? That is a reasonable question we get asked, and the frustrating answer we have is that It Depends. That answer is frustrating to hear, so we want to shed some light on some contributing factors that drive the rate up, what helps drive the rate down, and why other quotes you receive can be so different.
Contributing Factors to Rating:
Insured Value of Home
(aka Dwelling Limit, aka Replacement Cost)
- This value represents a good faith estimate for how much it would cost to re-build your home in the event of a total loss.
- This is a major driving force for the cost of your homeowners insurance policy. The higher this limit, the more the insurance carrier is on the hook to pay.
- This limit can affect other limits with most admitted carriers as coverage limits for Other Structures and Contents and Loss of Use tend to be restricted to a percentage of the Dwelling Limit.
Optional Coverages You Select
- Adding more optional coverages to a homeowner’s insurance policy can give you better piece of mind that you are covered against more potential for damage and financial loss, which can be a good thing if you prefer to cover as much as possible. Adding more coverage is not free, so the more coverage is added, the higher the total cost will be.
- Earthquake coverage is typically the most expensive optional coverage and can range from a few hundred dollars to over $1,000. This range depends on a variety of factors, including the Dwelling Limit and if the house is a Frame or Brick house.
- The good news is that we will review these options with you to allow you to make an educated decision on which options are important to you – and which are not.
Age of Home plus age of Roof, Wiring, Plumbing, HVAC
- Age of Home – These days, most insurance companies want to insure newly built homes, so they have relatively low premiums. This is because new construction should not experience roof leaks, water pipe bursts, etc. If they do, the warranties should cover anything like that should it happen. This is great at first, but when those warranties expire, the insurance cost will start to increase.
- Roof – Even though it seems to make sense that the roof doesn’t need to be replaced if it is not leaking, the insurance companies prefer to have a pro-active, preventative approach. The age of a roof is a substantial factor in the rate. If a roof is over 12-15 years old, the rate starts to increase. Once a roof is 20 years old, a lot of insurance companies will require a new roof be installed (or for 5-gauge metal roofs, they need to be re-sealed/painted).
- The exceptions here are true standing seam roofs and slate roofs.
- HVAC – these units tend to last 15-20 years before needing replacing. Once a unit exceeds 15 years old, it could start to adversely affect the rate.
- Wiring – the age of wiring is more forgiving, as long as it would meet today’s code. Typically, when wiring gets to be older than 35 years is when insurance companies start to question it. Showing even partial updates to the wiring can be helpful.
- Plumbing – The age of pipes can sometimes be shown in the material of those pipes. Like the wiring, this is more forgiving as long as the pipe material would still be acceptable today.
- If caste iron pipes exist, those would be from the 1940’s – 1950’s and really should be replaced as they have a useful lifespan of 50 years.
- If polybutylene pipes are in the house, even if they have “copper fittings”, this is an issue that would need to be addressed as they are unacceptable to almost every insurance company. These were used from around 1980 – the mid 1990’s.
- Copper, PVC and PEX pipes are generally acceptable today and should not affect your rate noticeably, but still once they are over 35 years old can be questioned. Like wiring, even partial updates can help.
Proximity to Ocean and Tidal Waters
- The closer a house is to the ocean, the more susceptible it is to wind from a Tropical Storm and Hurricane.
Home Features that Help the Rate
The credits here vary between company and depend on how much credit the home already has. Some common credits include:
- Wind Mitigation Features
- Hip Shape Roof – This is like a pyramid in that the roof covering comes down on all sides, resulting in a stronger roof.
- Opening Protection for ALL windows and doors – Carriers vary on what they accept here as some give credit for having pre-cut plywood that can be hung over windows and doors or regular shutters that can be latched closed, but other insurance companies do not. Other options for this include Hurricane Fabric, Impact Resistant Windows and true Hurricane Shutters. For doors to not need extra protection it is when it hinges to open outward instead of the standard that opens in. This is because the door jam on an outwardly opening door will prevent the door from blowing open.
- Wind Mitigation Form – This is a form completed by a licensed Contractor that shows the insurance company what features a house has that typically qualify for discounts. These include the opening protection items listed above as well as things like a Secondary Water/Ice Barrier under your roof covering, details on the nail types used on the roof, and if/how the roof is connected/attached to the house structure (i.e. hurricane clips and straps).
- Water Leak Detection
- Water damage from leaks is a huge source of losses. A fairly new product exists that a plumber can install can detect a drop in the water pressure due to a water leak. It can notify a homeowner, and some allow you to remotely cut off the water, thereby saving what could be a big water loss. Some insurance carriers have started giving credits to homes that have these, and soon enough it will be a widely used credit given to encourage homeowners to install this product.
- Centrally Monitored Fire and Burglar Alarm
- Having an alarm system that has an active contract for a 3rd party to monitor it for you has long been a way to reduce your insurance rate. Before this can be applied, a current Certificate from the alarm company must be submitted to the carrier.
- Wind Mitigation Features
Why are other quotes I receive so different in price?
- Do not just look at the bottom line and pick the lowest price because the devil is in the details. No other agent is getting a better rate, so the difference will be in the coverage or in the information submitted.
- Some insurance agents are purely sales driven. They will do whatever they can to drive down the bottom line, knowing that some people will decide purely based on that. Unfortunately, this can go wrong when they have a claim or when a credit wrongly given by an agent is discovered to be invalid. This can result in a claim being denied or the price increasing after the fact. Crescent Insurance Advisers works with our clients’ best interest in mind, and we do our best to have correct information submitted to have accurate pricing for you instead of just the cheapest.
- The different between the final price of a quoted policy with earthquake coverage as well as a lot of other optional coverage and one that has nothing optional at all is substantial. This is where it is important to take the time to talk through these options with a trusted insurance adviser who can walk you through what each is and show you the cost of each. Then you can make an educated decision on what selections you make on coverage based on the cost as well as your personal approach to insurance – i.e. your risk tolerance.