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Calculating the Cost of Home Insurance

Posted October 10, 2012 in Advice Column, Norwalk

With insurance companies losing money in home insurance the last six years, homeowners insurance rates have gone up in the last year. Here are some factors to consider when purchasing home insurance. All of these factors can have an influence on the price you pay for home insurance.

    The condition of the home. Insurers call this pride of ownership. Some of the overall factors the companies look at are condition of the roof, siding and decking. Newer electrical, furnace, roof and plumbing will earn you discounts off your insurance. New homes qualify for discounts because of the overall condition should be of high quality. Some insurance companies will discount your policy up to 30 percent for a new home.

    The construction of the home. Certain types of homes are less expensive to insure because they are more resistant to damage. For example, a brick home is preferable because of its resistance to wind damage.

    Safety factors. Many insurers also offer discount of approximately 5 to 15 percent for safety features such as burglar alarm systems, deadbolts, window locks and smoke detectors.

 Location of home. Homes located in town are generally less expensive to insure than houses in the country. The proximity to fire stations are the reason the rates for homes in the country are higher.

    Type and amount of home insurance coverage needed. Home insurance typically covers damage or loss to your home, contents and detached structures for damage or losses. The policies also coverage liability coverage if someone is injured on your property. Lane Insurance recommends clients to add sewer backup to their policies as it is not covered under a basic policy.

   Desired deductible. The deductible is the amount that the policyholder must pay before your insurance company starts paying benefits. The higher the deductible, the lower your premium can be. A flat deductible is preferable to a percentage deductible. A flat deductible of $1,000, for instance, is preferable to a 1 percent deductible as it does not go up as the value of your home goes up. If you have a 1 percent deductible and your home is insured for $250,000, you have a $2,500 deductible. That is a really high deductible that raises every year as your coverage amount increases. The higher your home value the higher your deductible.  Other companies offer percentage deductible, with their clients not always aware of how high their deductible is.

Loyalty to your company. Insurers will often reduce their rates if you buy more than one type of coverage such as auto and home. Carriers are offering up to 30 percent discount for bundling your auto and home together. Companies also offer renewal discounts for the length of time you’ve been with a carrier.

    No mortgage. If your mortgage is paid off? Lane Insurance has a number of carriers that offer steep discounts for not having a mortgage on your home. Does your current carrier offer that discount?

Information provided by Mike Lane, Lane Insurance Agency, Inc., 1225 Sunset Drive, (800) 244-4608.

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