6 Home Modifications That Affect Your Insurance Premium
As a homeowner, you should be aware of how home changes can impact your insurance cost. Some changes can increase your premium, while others can help you save on premium payments. Here are six modifications and how they can affect your premium rates.
1. Roof
A new roof installation or upgrade can significantly impact homeowners insurance premiums. By replacing an older roof with a newly constructed one, homeowners can often drastically lower their insurance rates.
Homes located in areas at heightened risk of wildfire or wind-related damage have higher premiums from the associated risks. Thus, a roof that utilizes superior-grade construction and materials, such as increased fire or wind resistance, will have a reduced premium from the reduced risk of damage. The same criterion applies to homes in hurricane-, wind-, or hail-prone states.
Homeowners will be eligible for additional discounts if they use special loss-mitigation measures, such as hurricane straps, waterproofing, or impact-resistant shingles. Since most home policies cover roof replacements for the perils defined in the policy, the newer the roof, the less premium an owner must pay for coverage.
2. Security and Smart Home Systems
Security systems and smart home technologies can reduce homeowners insurance premiums. Protective features such as deadbolts, fire alarms, and monitored security systems can result in discounts, with the discount's size dependent on the device's quality and effectiveness.
A centrally monitored system that directly alerts police or fire departments will earn a larger discount than a local alarm system that rings at home. Smart home devices and systems, such as smart locks, water leak detection systems, and gas leak or freezing pipe sensors, can also result in policy credits and discounts.
3. Home Business Renovation
Home renovations to create a home-based business can affect homeowners insurance premiums in several ways. Standard policies generally limit coverage for businesses, so any additional coverage required for specialized equipment or more extensive supplies will result in higher premiums.
Additionally, homeowners insurance companies may exclude liability protection for injuries related to the business or charge more for add-on coverage. You should discuss any business risk in the home with an insurance agent to ensure the premium adequately covers all assets and visitors.
4. Expansion
When you expand your home to accommodate a growing family, you must consider the changes to your insurance coverage. Home additions, whether inside or outside, can increase the property's value and will likely require a higher level of dwelling coverage.
You must also consider additional coverage to protect the newly built areas, such as sewer backup coverage for a finished basement. Furthermore, the cost to rebuild the property may increase, which necessitates a higher amount of insurance protection and a higher premium.
5. Electrical and Plumbing System Upgrades
Electrical and plumbing system upgrades in the home reduce your homeowners insurance premiums. For example, replacing older types of wiring, such as aluminum or knob and tube wiring, with copper wiring can reduce the risk of electrical damage and fires. This upgrade will result in a lower insurance rate.
Similarly, a home with outdated plumbing systems pose a risk of water damage. Replacing them with modern hardware can reduce the risk for insurers and result in lower premiums. In some cases, eco-friendly upgrades like solar panels or energy-efficient appliances can also reduce rates.
6. Swimming Pool
A swimming pool can significantly increase homeowners insurance premiums. You may need to increase the amount of dwelling coverage to ensure the premium covers any damage to the pool. Also, you may need to purchase additional liability coverage to protect your assets in the event of an accident.
Furthermore, a pool increases the risk of someone getting hurt on the property. Hence, homeowners insurance companies charge more for liability protection.
Ensure you receive adequate coverage to protect your home from threats and risks with The Policy Center. Contact us to go over our insurance policies.
