Is Insurance Cheaper in New Homes? How New Homes Can Save You Money

Homeowners insurance is a type of property insurance that covers losses and damages to your house and the assets in your home.

Homeowners insurance also provides liability coverage against accidents in the home or on the property.

home insurance
Homeowners cover Landscaping with home insurance | MONEYGEEK

The cost of homeowners insurance depends on many factors, such as the location, size, age, construction type, and features of your home, as well as your personal characteristics, claims history, and the coverage limits and deductibles you choose.

One of the factors that can have a significant impact on your home insurance premium is the age of your home.

Generally speaking, newer homes tend to have lower insurance rates than older homes, for several reasons.

Why New Homes Have Lower Insurance Rates

New homes have lower insurance rates because they are less likely to experience damage from perils such as fire, water, wind, hail, theft, and vandalism.

This is because new homes are built with modern materials and techniques that make them more durable, resilient, and secure than older homes.

Some of the advantages of new homes that can lower your insurance rates are:

1.New homes have updated electrical, plumbing, heating, and cooling systems that are less likely to malfunction or cause fires or water damage.

2.New homes have fire-resistant materials and features, such as sprinklers, smoke detectors, and fire alarms, that can prevent or minimize fire damage and injuries.

3.New homes have storm-resistant materials and features, such as impact-resistant roofs, windows, and doors, that can withstand wind and hail damage.

4.New homes have security systems and devices, such as burglar alarms, cameras, and locks, that can deter or detect theft and vandalism.

5.New homes have energy-efficient appliances and fixtures, such as LED lights, smart thermostats, and low-flow faucets, that can reduce your energy consumption and utility bills.

How Much Can You Save on Insurance with a New Home?

The amount of money you can save on insurance with a new home depends on the specific characteristics of your home and the insurance company you choose.

However, some studies and surveys have estimated the average savings for new homes compared to older homes.

According to a study by Insurance.com, the average annual premium for a new home (less than five years old) is $1,083, while the average annual premium for an older home (more than 50 years old) is $1,574.

This means that new homes can save an average of $491 or 31% on insurance per year.

According to a survey by Bankrate, the average discount for a new home (less than 10 years old) is 26%, while the average discount for a new construction home is 40%.

This means that new homes can save an average of $371 or 26% on insurance per year, while new construction homes can save an average of $571 or 40% on insurance per year.

How to Get the Best Insurance Rates for Your New Home

While new homes generally have lower insurance rates than older homes, there are still some things you can do to get the best insurance rates for your new home.

Here are some tips to help you save money on your home insurance:

`1.Shop around and compare quotes from different insurance companies.

You can use online tools and websites, such as [Coverage.com] or [NerdWallet](^5^), to find the best rates and discounts for your new home.

2.Bundle your home and auto insurance policies with the same company. This can give you a multipolicy discount that can save you up to 18% on your premium.

3.Choose a higher deductible for your policy. A deductible is the amount of money you have to pay out of pocket before your insurance kicks in.

A higher deductible can lower your premium, but it also means you have to pay more in case of a claim.

4.Maintain a good credit history and score. Some insurance companies use your credit-based insurance score to determine your risk level and premium.

A good credit score can show that you are financially responsible and less likely to file a claim.

5.Stay claims-free and loyal to your insurance company.

Some insurance companies offer discounts for policyholders who have not filed a claim in a certain number of years or who have renewed their policy for a certain number of years.

These discounts can range from 5% to 8% on your premium.

What factors affect cost of homeowners insurance?

The cost of homeowners insurance depends on many factors, such as the location, size, age, construction type, and features of your home, as well as your personal characteristics, claims history, and the coverage limits and deductibles you choose.

An image of home insurance
Home Property [PHOTO COURTESY OF CLOVERED]
Some of the main factors that affect the cost of homeowners insurance are:

1.The replacement cost of your home.

This is the amount of money required to rebuild your home from the ground up, and it is based on the square footage, construction type, building materials, features, and age of your home.

A higher replacement cost means a higher insurance premium, because it would cost more to repair or rebuild your home in case of a claim.

2.The location of your home.

The location of your home can affect your insurance rates in several ways, such as the risk of natural disasters, crime rates, and the cost of living in your area.

For example, if you live in an area that is prone to hurricanes, floods, earthquakes, or wildfires, you may pay more for your insurance than someone who lives in a safer area.

Similarly, if you live in an area that has a high crime rate, you may pay more for your insurance than someone who lives in a low-crime area.

3.The use of your home.

The use of your home can affect your insurance rates in terms of how often you occupy your home and whether you use it for any commercial purposes.

For example, if you live in your home full-time, you may pay less for your insurance than someone who lives in their home part-time or rents it out to others, because you are more likely to maintain and protect your home.

Similarly, if you use your home for any commercial purposes, such as running a business, hosting guests, or storing inventory, you may pay more for your insurance than someone who uses their home solely for residential purposes, because you are exposing your home to more risks and liabilities.

4.The proximity of fire protection services.

The proximity of fire protection services can affect your insurance rates in terms of how quickly and effectively a fire can be extinguished in your home.

For example, if you live near a fire station or a fire hydrant, you may pay less for your insurance than someone who lives far away from them, because you have a better chance of minimizing fire damage and injuries.

5.The choice of deductibles.

The choice of deductibles can affect your insurance rates in terms of how much money you have to pay out of pocket before your insurance kicks in.

For example, if you choose a higher deductible, you may pay less for your insurance than someone who chooses a lower deductible, because you are taking on more financial responsibility in case of a claim.

6.The availability of any premium discounts.

The availability of any premium discounts can affect your insurance rates in terms of how much money you can save on your insurance by meeting certain criteria or taking certain actions.

For example, you may be eligible for premium discounts if you have a good credit history, a good claims history, a security system, a smoke alarm, a sprinkler system, or other safety features in your home.

You may also be eligible for premium discounts if you bundle your home and auto insurance policies with the same company, pay your premium in full, or renew your policy for a certain number of years.

These are some of the main factors that affect the cost of homeowners insurance, but there may be other factors that vary depending on your specific home and insurance company.

Therefore, it is important to shop around and compare quotes from different insurance companies to find the best value for your home.

Conclusion

Homeowners insurance is an important and necessary expense for anyone who owns a home.

However, the cost of homeowners insurance can vary depending on many factors, including the age of your home.

New homes generally have lower insurance rates than older homes, because they are less likely to experience damage from various perils.

Homes can save an average of 26% to 40% on insurance per year, depending on the insurance company and the discounts they offer.

To get the best insurance rates for your new home, you should shop around, bundle your policies, choose a higher deductible, maintain a good credit score, and stay claims-free and loyal to your insurance company.

 

Leave a Comment