Before purchasing homeowners insurance, it is important to understand how insurance providers calculate your coverage and rates. The State of New Jersey’s Department of Banking and Insurance (DoBI) is a great resource when it comes to researching the laws and regulations on what can and cannot be taken into consideration when it comes to getting homeowners insurance quotes. The following are 4 factors that can influence the cost of your homeowner’s insurance in the state of New Jersey.
1. The Type of Home You Have
The condition of your home, type of construction and cost to replace it are all major factors that can greatly affect the cost of your homeowner’s insurance. If you are currently trying to insure an older home, your premiums are likely to be higher. On the other hand, newer homes tend to qualify for discounts. Another factor that can affect your premium is the type of construction of your home. If your home is made of brick, it is more likely to withstand damage from natural causes like wind and storms and is more likely to survive a house fire.
Lastly, insurance providers tend to take how much it will cost to rebuild your home into consideration. The New Jersey DoBI explains that it is extremely important to insure your home to its replacement cost. If you suffer a loss and are underinsured, you may end up having to pay fees and expenses out of pocket.
2. The Location of Your Home
Depending on where you live, your homeowner’s insurance may cost more or less than in other areas. This is affected by a multitude of factors both natural and societal. For example, if you dwell in a coastal location that is more prone to strong wind or storm damages, your rates will be higher. (Many New Jersey insurance providers have separate deductibles for windstorms, hail and hurricanes.)
Premiums also tend to be higher in areas with high crime rates and areas that are further away from fire departments and fire hydrants. An increase of risk means an increase of rates.
3. The Coverage You Select
Your premiums will be increased if you add on additional coverages in addition to your basic plan. For example, adding coverage for personal property, art and jewelry will incur an additional cost.
However, you can lower this cost by choosing to have a higher deductible. Yes, in the case of an emergency, you are paying more to replace your property but until then your monthly payments will be lower
The New Jersey DoBI lists typical discounts that you may qualify for that can reduce the cost of your homeowner’s insurance including: Multiple policy discounts, credits for protection devices (sprinkler systems, smoke alarms and detectors), long-time policy holder discounts and discounts that are provided if no one in the home smokes.
There are a myriad of factors that go into generating the cost of your individual homeowner’s insurance policy. Do your research and work with a seasoned insurance broker to get the most comprehensive coverage for a competitive price.