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Understanding Homeowners Insurance Costs

Insurance is something that most homeowners purchase. Still, they may not fully understand how NJ homeowners insurance companies price their policies. A quick explanation of the factors companies look at can help clarify the process greatly.


Companies Start by Looking at Basic Information


When a customer first requests a quote from an insurer, the company will collect some basic information. They will most likely want to know the size, age, and location of the home. They will also take into account the purchase price and the appraised value of the home. In looking at these factors, they are considering the overall value of the home and how likely it is to have problems that require extensive repairs.


Additional Elements That Tend to Make Policies More Expensive


Insurance policies will be more expensive where a homeowner has additional risks. One important risk factor is whether the homeowner will be living in the residence or whether it will be leased. NJ homeowners insurance companies tend to offer the lowest rates for homes that are owner-occupied year-round. Vacation homes and rentals are more likely to incur claims, so the insurance costs are higher.


Companies also take into account:


  • The size of the household
  • The approximate value of household belongings
  • Whether there is a pool, trampoline, or other type of liability risk


Factors That Can Reduce the Cost to the Customer


NJ homeowners insurance companies may also offer discounts for certain scenarios. For example, they may give breaks for a home security system or an excellent claim history.


With some basic pricing know-how, you should be able to find the policy that is right for you in no time.