But there are still ways to lower your homeowners policy premiums. Understanding the main factors affecting the cost will help you do just that – including these four:
1. Your Dwelling
The replacement value of your home is the biggest single factor in determining homeowners insurance premiums. The building’s square footage, the quality of construction and types of materials incorporated into your home, and the current cost of construction work in your local area will all come into play.
It’s recommended to get at least 80% to 90% dwelling coverage, based on the replacement cost of your building (not necessarily the same as its market value), but 100% is ideal.
More expensive dwellings cost more to insure, while older ones can cost more too if they would require a lot of work to bring them up to code following a disaster.
Many other cover levels in a homeowners policy are set as a percentage of the dwelling coverage, including personal property protection, loss of use insurance, and detached structures coverage.
2. Liability & Medical Payments
Normally, you buy at least $100,000 liability coverage with your homeowners insurance. While that may sound like a lot, it goes fast in the event of a personal injury or property damage claim against you. Most people “in the know” recommend to increase liability cover as high as $300,000.
Medical payments coverage sounds a lot like liability to most people, but it’s actually different. Liability covers you if you are at fault, while medical payments covers it regardless of fault. Medical payments cover normally is set at from $1,000 to $5,000 – so it’s used mostly for more minor incidents.
Location, location, location is a constantly cited saying in the real estate business, and it applies pretty well to insurance premiums as well. Insuring the same building in downtown Miami or on the Keys could easily cost twice as much per month as insuring a home in Tallahassee – which has the cheapest zip codes for homeowners insurance in the state.
Partly, this has to do with which locations are more prone to hurricane damage or other weather damage. But it also has to do with crime rates and claim rate averages per zip code.
You can get your homeowners’ deductible based on a percentage of the insured building’s value or as a set dollar amount. Deductibles of 2% or of $500 to $1,000 are pretty common in Florida.
Hiking up a deductible to $2,500, the highest bracket usually permitted, will greatly reduce your premiums but risk high out of pocket expenses.
For help in determining your ideal deductible, liability, dwelling coverage, and more, contact an expert insurance agent at Flagler County Insurance Agency today!