Homeowners insurance rates tend to fluctuate from year to year. Sometimes the increase is such a minuscule amount that it goes unnoticed, and sometimes it’s significant enough to leave homeowners scratching their heads, wondering what lead the insurance company to raise it. While some of these increases are unavoidable, learning about these common factors that increase homeowners insurance rates can protect you from incurring a financial blow.
Increase of Property Value
As homeowners policies are designed to cover the full replacement cost for your home, with inflation increasing the value of your property, it’s natural to see a slight increase in your premiums. Your homeowners insurance can be increased by factors such as rising labor costs or the price of goods. Other factors such as gentrification or new home improvements can also generate an impact. However, bear in mind the market value of your house does not equal the replacement value.
Increase in Risk in Your Location
Some cities are deemed “high risk” due to facets of the area that make the home prone to costly damage. If your location develops some of these high-risk factors, you’ll begin seeing similar premium spikes as a result. Some of these risk categories include:
- Areas prone to storm damage.
- Locations with high crime rates – though increasing security can reduce premiums, too.
- Communities with luxury properties with high premiums.
Unfortunately, insurance rates are at the mercy of a location’s unpreventable risk factors, but such premium adjustments are necessary to fully protect the policyholder as well as the insurance company’s cash flow.
Decrease in Your Credit Score
As with most insurance policies, bad credit – typically those falling below 580 – can increase your premium payments. An insurance carrier will charge you more to ensure they have the funds required to cover your damages or replacement cost. Adversely, a good credit score will generate a more budget-friendly insurance rate.
Attractive Nuisances
Attractive nuisances are recreational features or pets on your property that can be construed as dangerous. These are considered liability risks, as they tend to lure children into potentially harmful situations. Dogs are the most common attractive nuisance, but other features considered risk factors include:
- Swimming pools, hot tubs, fountains, and wells.
- Machinery, such as lawnmowers and tractors.
- Landscaping structures such as bridges or tree houses.
- Trampolines.
- An easily accessible roof.
Each case is carefully examined by an insurance provider to determine liability, but it’s important to take precautions before adding an attractive nuisance to your property.
Perilous Structural or Design Elements
It comes as no surprise that shoddy plumbing, faulty electrical wiring, foundation damage, and a roof in need of a repair increase your insurance rates. However, some of these elements may be out of your control. If your home includes a balcony or winding staircase, the increased likelihood of falls will raise your policy’s premiums. Also, a wood-burning fireplace or stove is considered a fire hazard by most insurance carriers.
No one likes to see their premiums rise, but it’s important to recognize that it’s often these common factors that lead to the increase in your homeowners insurance rates. Simply becoming informed about these causes can guide you toward lowering your rates. At TJ Woods Insurance, we have the expertise to answer all your questions regarding your homeowners policy and can provide you with helpful tips to cut back on your premiums. Contact us today to learn more.
