First, it’s essential to understand what defines a homeowner’s insurance policy. To put it loosely, it’s the dwelling you own and use as your occupied primary residence. For our breakdown, we will not include policies for tenants, landlords, builder’s risk, camps, and other seasonal homes, as those are each priced differently.
“Building” the Insurance Price
The following is a comprehensive list of the most common items that determine what an insurance carrier will charge. You can add additional endorsements to increase coverage and, ultimately, the price, but these factors listed below are the ones that create your baseline price.
- Location, Location, Location – You know the old real estate adage. However, with insurance, location is not about proximity to the park or excellent restaurants. The location of the nearest fire hydrant and fire department to your home is important. The further the house is from either, the higher the price. If the closest fire department is more than 5-miles away, many insurance carriers will pass altogether. Other location factors affecting the price are rural vs. urban and historical weather conditions.
- Size of home – When considering what defines the size, think above-grade & centrally-heated square feet. That is the amount of living space outside of the basement. The more square feet the house has, the more expensive it will be to insure.
- Style – This one might surprise you. There are numerous styles of homes in the Central New York area. Colonial, Split Level, Raised Ranch, Ranch, Cape, Old Style, and Contemporary are common examples. Thinking back to size, all of these styles could be the same square feet, but the cost to insure them will vary significantly. For example, a 1,800 sq. ft. colonial will be less expensive than a ranch style of the same size. The cost to replace a ranch is higher due to the amount of roofing and perimeter walls.
- Foundation – Being located in Central New York usually means that your house’s foundation will consist of a concrete basement. While there are exceptions like a complete slab or a slab combined with a crawlspace, most are basements. Slabs and crawlspace foundations are less costly to insure, and full basements that make up the entire footprint of the house have the highest cost. Basements with finished living space will require additional coverage, increasing the premium.
- Age – The age of the house (the year it was initially built) can play a role in the pricing of the policy. Homes built before 1930 tend to carry a much higher replacement cost due to the difficulty of finding similar materials and skilled labor to fix or restore. When you hear people say, “They don’t build’em like they used to,” these are the ones of which we’re talking!
- Construction – This is an often-overlooked item in our area. Today, most houses in Central New York get built with a wooden frame. Additional building types include Brick, Log, Block, and Stone. There is a further surprise buried in the construction pricing component. Frame houses, while less expensive to replace than brick, will still cost you more to insure. Because wood will burn much faster than brick, the risk of significant loss on a frame house will yield a higher price.
- Roof Material – Typically, you will encounter two types of roofs on a residential house: asphalt/composition shingles or a metal one. Most roofs in our area are shingles. The age of a roof can impact your ability to choose from multiple insurance carriers, and insurance companies tend to decline your application once a roof is past 25 years old.
- Heating and Air – The central heating for the house is another driver of price. A natural gas forced air system is how most newer homes are heated, and these systems can cost less to insure than a water-boiled baseboard style. One reason is that a central air-cooling system can share the same ducts with forced-air heating, and baseboard requires a separate duct system altogether.
That’s the house, but what else is there?
There are two main pieces to a homeowners insurance policy. The first part is all about the house, and the other is about the additional risk factors associated with the property. The risk factors help to make up the second part, known as the liability section of the homeowner’s insurance policy.
Like an auto policy, you have some freedom with how much liability coverage you can purchase. Regardless of the amount you choose, the price will use some of the following variables.
- Swimming Pool – Pools provide tons of excitement and can add to the desirability of a house. They can also lead to tragic events. Any house with a swimming pool increases the likelihood of injury or death to a non-resident. Depending on the pool style (in-ground or above), the impact on the liability pricing can be significant. Additional accompaniments like a slide or diving board will usually lead to a higher insurance price.
- Trampolines – Most insurance carriers would probably outlaw trampolines if they could. Again, injuries here to non-residents are a significant factor. Owning a trampoline at the time of application can drive up your liability costs.
- Home-based Business – This should not be confused with a person who works for the employer remotely. A home-based business (which requires disclosure) is for any occupant who operates a business of their own from home. A few examples of a home-based business are a piano teacher, hairstylist, tutor, small engine repair, accountant, photographer, bicycle repair, & computer programming are a few examples of a home-based business. Insurance carriers will increase the liability premium based on the business being on-site and the type of business it is. Be sure to tell us if you operate a business from home so you can learn about appropriate options to insure your operation.
What about “You”?
Yes, most of your homeowner’s insurance premium is made up of the pieces and parts we’ve mentioned; a “you” factor does remain. Just like with auto insurance, your credit history will carry weight. Past credit problems can increase the overall rate. That’s not even the most significant item, though. What’s most important is your past claims history. Insurance carriers will go back five years to determine if you’ve had to file a claim on any property insurance policy you have had. Prior claims can drastically affect the premium. More than one claim in the past five years can diminish the number of carriers willing to offer a policy.
If you have had to file more than one claim in the past five years, fear not. We have carriers who do not base their homeowner’s insurance prices on your past claims. Provided what had caused the claim to occur has been remedied, we can still usually find you a competitive rate.
Now you know the main pieces that help determine your baseline homeowner’s insurance premium. As we mentioned, numerous endorsements for additional coverage can tack on more expense. It all comes down to what you care most about and the extent you want to insure it. The Horan Companies team of insurance professionals is here to help guide you through those insurance decisions. Call or contact us, and remember, we will not spam you or sell your information. We’ve got you.