It may come as a surprise, but finding insurance for your new home is not guaranteed. Insurers consider numerous factors when deciding whether to offer insurance coverage to homeowners. The rates offered, and ease of which you can attain coverage will be be determined by how many risk factors are present in the insurers assessment.
Knowing the risk and what you can do to minimize that risk is an important step in your quest to find the best coverage. Here are four common reasons that people find it difficult to get homeowners insurance.
One of the biggest factors in homeowners insurance is location. Where your home is situated will determine its susceptibility to criminal damage, deterioration, and the whims of nature. Insurers may refuse coverage in certain areas, provide limited policies, or decide to look at applications on an individual basis.
If you live in certain regions of California, for example, your home may be at a higher risk of damage from brush fires. That is a red flag for insurers and you will likely find it difficult to get coverage. Taking certain precautions such as spark proofing your property and clearing flammable materials can help to improve your chances of securing insurance.
Insurers are keen to know what your property is made out of. The type of materials used to build your home will be a heavy determinant in your insurance premiums and perhaps even availability of coverage. So, insurers will need to know whether your home is primarily made out of wood, brick, or glass.
Furthermore, the age of the building will need to be considered. One reason for that is because of the difficulty in finding replacement materials for older buildings. As such, premiums will usually be higher for older buildings. Updates to things like the homes electrical, plumbing and heating systems can help to reduce premiums.
People with multiple insurance claims are perceived to be higher risk by insurance companies. The more claims you have, the more difficult it will be to find an insurer or even get a new policy renewed. In addition to considering the amount of claims made within the past three years, underwriters will factor in the type of claims. Needless to say, the more substantial the claim, the bigger the red flag.
One way to make yourself more attractive to the insurers, is to refrain from making any claims for a period of at least three years. After this time, you may find that more options become available to you.
Like most things financial, your credit score plays a role in your ability to get insurance. Though far from the only factor, a good credit score can open up the door to some of the most attractive premiums on the market. A low credit score on the other hand, might turn many insurers off giving you a quote. That is particularly relevant when combined with other negative factors.
Address this factor by taking steps to improve your credit rating. That might take time, but it will certainly help to move you out of the high risk category for homeowners insurance.
Being high risk can make it difficult to get homeowners insurance. For some, it may be because they live in a listed building, for others it could be due to something as uncontrollable as the weather. Whatever the reason, talk to your high risk insurance agent to learn about the best options and to ensure you get the most appropriate coverage.