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External Factors That Impact Homeowners Insurance Coverage

There are many factors that ultimately go into calculating your homeowners insurance premium. If you're looking to secure a great rate but have yet to select your next home, you may want to take note of several key risks to look out for once your move in. Some of these could raise your rates, or even cause flat-out denial of a homeowners insurance application.  

Factors that impact your approval
First thing's first - you need to be sure that you'll be able to receive coverage. A simple way to do this is to call local insurance companies in the area you're considering moving to and asking them questions about that location, and how they will ultimately affect your homeowners insurance premiums. A cheat sheet of points to touch upon include the new home's general location, as well as your past credit and insurance records.

According to Wells Fargo, one of the quickest ways to end up red-flagged by insurers is if you've filed for lots of previous insurance claims. In general, the more claims you've filed, the higher your perceived risk is to insurers: Thus, you are more likely to be denied at the initial application or renewal of your current policy with that agency. 

If the location of your new home is in a disaster-prone area, be sure to check with insurance providers as to their coverage and cost of different coverage options. While most providers will typically offer some level of homeowners or renters insurance coverage, others may reject your application because of such high risk. Excessive mold or water damage, typical to older homes, can also be a cause for denial of coverage.

That little old house might be charming - but it might also drive up your homeowners insurance premiums!
That little old house might be charming - but it might also drive up your homeowners insurance premiums.

Factors that impact your premium
There is a direct correlation between a homeowner's perceived risk and the cost of their insurance premiums. According to The Simple Dollar, if you want lower insurance, you'll want to lower your perceived risk to insurers.

Before moving into a new home, be sure to research average rates of nearby addresses in the area. Rates and perceived risk can vary greatly by location, sometimes by as little as one neighborhood or even one street from a low-risk area.

"Rates and risk can very greatly by location, sometimes by as little as one street over."

If you've already moved into a home and want to lower your rates further, have no fear! There are usually always ways to reduce your perceived risk. Removing in-home features that can result in liability cases such as a pool or a trampoline can dramatically reduce your risk to insurance agencies. If you don't want to remove them, consider putting up a fence around your pool and a protective net around your trampoline. According to Wells Fargo, these are simple fixes to the problem without sacrificing the family fun you probably envisioned when installing them.

Two great tips from the Insurance Information Institute that can help lower your homeowners insurance premiums are to make make your home more disaster resistant, and improve your home security. Adding features such as storm shutters or reinforced roofing can really help lower your risk - especially in locations that frequently experience inclement weather. If your home is older, periodic inspection and updating of its utility systems can help reduce the risk of fire or water damage as well. 

In terms of security, you'll get an automatic 5 percent off of most policies for installing smoke detectors, and can typically get further reduced rates for including dead-bolt locks on your doors. 

If steps from this list cannot be taken, give your insurance agent a call. Have an honest conversation with them about what you can do to reduce your risk and lower your premiums. If they can't help you immediately (and they often can), your agent can typically advise you on steps you can take to better reduce your risk.

To compare homeowners and renters insurance fast, check out CoverHound.

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