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Personal Insurance Posts

Budgeting for Your Homeowner’s Insurance

By March 14, 2023No Comments
buying a new home

Homeowners typically use an escrow account to pay for your homeowners policy as part of your monthly mortgage payment. Once your bill for the year comes due, your lender withdraws the funds from the escrow account and pays the bill on your behalf.

Your actual premium will depend on several factors including:

  • Location
    • Exposure to natural disasters and fire-fighting capability in your local area affect your premium
  • Deductible
    • This is the amount you pay toward repair before insurance covers your claim. A higher deductible means a lower premium.
  • Amount of insurance coverage:
    • Higher-value homes and/or higher costs to repair homes in your area will require more coverage
  • Age of the home
    • Newer homes may be cheaper to insure than older ones.
  • Your Personal Claim history
    • Insurance carriers will look at how often you’ve filed homeowners insurance claims in the past using a Comprehensive Loss Underwriting Exchange (CLUE) report. If this report shows you’ve filed numerous claims, you may be considered a higher risk on your new policy, and need to pay higher premiums.
  • Previous Owner’s Claim History
    • A CLUE report also shows insurance claims made by anyone who lived at your address in the last five to seven years. So, although you may not have filed any claims, if the previous owner filed two, your insurance premium would be underwritten as though you filed both claims.