Homeowner’s insurance is no doubt a necessary expense, but unfortunately, some people are unable to afford it and they really don’t understand why it costs as much as it does. Many individuals simply accept sub-par coverage and policies with low limits and little to no protection. Without the proper amount of insurance coverage, an individual is at risk of facing a complete and total loss of their house and all of its contents. There is also the possibility of facing a lawsuit alone when it comes to liability situations from injuries sustained on the property. Homeowner’s insurance is not something that should be avoided or ignored, so it is important to understand what can increase its cost.
Poor credit scores are one of the primary reasons that individuals either get declined for coverage or face higher premiums. Although this may seem unfair, the insurance industry has proven that there is a higher incidence of claims filed among this population. As a result, there is more risk to the insurer and the premiums increase. It is important to be a well-informed consumer, so insurance seekers should pull their report from one of the three credit bureaus and learn their credit score.
Although pets are often considered family members, the insurance companies see them as potential problems. Some animals, particularly different types of dogs, are considered high risk because of their ability to attack and harm human beings. These canines include pit bulls, chows, and wolf hybrids. The simple possession of any of these pets can cause an insurance company to decline coverage or increase rates.
Insurance companies have an interest in attracting and retaining valuable customers, whom they consider to be such because of no previous claims and a great relationship. Insured parties that have multiple product lines, such as automobile insurance or business insurance, stand to receive discounts on their property policies. An individual should always carefully weigh the pros and cons of filing an insurance claim. If it is a relatively small loss, it may be much less expensive in the long run to pay out of pocket. Insurance policies should be reserved for large and catastrophic losses.
Some other risk factors that can increase the cost of insurance deal with recreational items present on the property. For example, a pool is seen as an incredible liability and will drastically increase the cost of insurance. All precautions should be taken, including a fence and security system, but the insurer will probably still not reduce home insurance rates. A trampoline is another item that can be great fun but can also cause insurance rates to soar. It may seem like a good purchase, but if it prevents proper insurance coverage then it should be avoided.
Homeowner’s insurance is undoubtedly one of the most important expenses a family has, and it is absolutely unacceptable to avoid it. Knowing what causes the premiums to be significantly higher may enable an individual to lower the cost to insure. Although it may seem expensive at first, considering the potential losses that it protects against should help put things in perspective.