Homeowner's insurance can be a confusing topic. Because of this, many homeowners don't fully understand why insurers charge the premiums they do, and as a result, premium charges often go unquestioned by policyholders.

But when you know how insurers determine your premium, you can work with those factors to lower your premium and say goodbye to expensive home insurance rates!

How Insurers Gauge Your Risk

When an insurance company determines your rates, they're really determining your risk. And according to the Insurance Information Institute (I.I.I.), insurers consider some of the following to determine exactly that:

• Where your home is located. Living in high risk areas like the Gulf coast or in crime-riddled neighborhoods drastically increase the chances that your home will be significantly damaged, ruined, vandalized or stolen from. It's for this reason that you'll pay more to insure your home in a high risk area.
• The cost to build in your area. Some insurers will look at the construction costs in your area to see how much it would cost to rebuild your home if it were destroyed. The higher the construction costs are in your area, the higher the likelihood that you'll pay for it in your home insurance rates.
Insurance Tip! It is important to know what you are getting when making purchases. Home insurance companies' that have a good reputation and a outstanding arrangement with current ‘economic solidity' and ‘principles' can offer lower premiums and better rates on home insurance.
• The materials used to construct your home. Materials like brick and other stone tend to better withstand the high winds that come with tornadoes and hurricanes. If your home is constructed (or partially constructed) from these materials, you'll probably see a dip in your homeowner's insurance premium.
• Other risk factors on your property. Insurers will also want to know if you have any swimming pools, hot tubs or trampolines on your property, as well as the kind of breed the family pooch is. All of these factors increase the risk of injury on your property and insurers may increase your rates accordingly.

Saving Money on Home Insurance

With all these factors, how can you save money on homeowner's insurance? Aren't some of these factors out of the hands of homeowners?

Yes and no. While you may not be able to control the weather or the actions of others, you can do the following to save money:

• Make upgrades. While you may not be able to change the location or construction of your home, you can lower your premium by upgrading plumbing and heating systems, installing sprinkler systems, additional smoke detectors and deadbolt locks. While these upgrades may take a little elbow grease and money on your part, it'll lower the risk for insurers—and your home insurance rates.
Insurance Tip! Living without home insurance is living on the edge.
• Make your home safe. If you have a pool or trampoline, fencing can keep children away from these areas without your supervision. If you have a dog that fits into a "high risk" breed category (like a pit bull), there may not be a lot you can do, and some insurers won't cover dog bite liability; ask your insurer for details regarding your pooch.
• Insure for the replacement cost. Your home would probably cost more to rebuild or replace now that it did when you bought it. Insuring your abode for the replacement cost will help you avoid any large depreciation if you need to file a claim.
Insurance Tip! You may think home insurance is only good in natural disasters. When a tornado, hurricane, or earthquake damages your home, your plan should cover the damage.
• Review your policy annually. If you sold grandma's expensive china last year, you no longer need coverage for it. Reviewing your policy annually will ensure that you have the coverage you need—no more and no less.

Start Saving on Home Insurance Today

While you may not be able to control how insurers determine your homeowner's insurance rates, you can make adjustments to your home to combat premium hikes. In addition to these money-saving tips, always remember to ask your insurance agent about any discounts for which you might qualify. Doing so will get you the affordable home insurance you need to save money—without having to skimp on coverage.

About InsureMe

Megan L. Mahan is a copywriter and insurance information expert with InsureMe in Englewood, Colorado. InsureMe links agents nationwide with consumers shopping for insurance. Specializing in auto, health, life, long-term care and home insurance quotes, the InsureMe network provides thousands of agents with insurance leads every year. For more information, InsureMe.com.

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