Homeowners Insurance Surveys: Factors That Affect Your Premiums and Risk of Cancellation
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Homeowners insurance is an essential protection that shields property owners from financial loss due to unexpected events such as natural disasters, theft, or accidents.
However, many homeowners are unaware of the specific factors that can influence their insurance premiums or even lead to the cancellation of their policy. Understanding these elements is necessary not only for maintaining affordable coverage but also for ensuring continuous protection.
We outline what an insurance risk survey typically evaluates and is looking for that can either raise your premiums or result in policy cancellation.
What Are Homeowners Insurance Surveys?
Homeowners insurance surveys are assessments arranged by insurance companies to evaluate the risk associated with insuring a particular property.
These surveys can be conducted at the time of policy application, during policy renewal, or after a claim has been filed. The primary goal is to determine the potential for future claims and to set appropriate premiums based on the level of risk.
What are Surveyors Looking For?
Property Condition and Maintenance
- Roof Condition: A roof in poor condition is a red flag for insurers. Regular maintenance and timely replacement can help avoid premium increases. Some of the things surveyors look for on your roof:
- Any moss covering more than 10% of your roof
- What your roof is made of
- Cracked or broken tiles
- Any debris on your roof
- A flat roof over a living area
- Plumbing and Electrical Systems: Outdated or faulty plumbing and electrical systems pose significant risks. Upgrading these systems can prevent premium hikes.
- Fire and Liability Hazards:
- Tree limbs hanging over roof or touching side of your home
- Cracks in the walls of your home
- Cracks in the foundation of your home
- Any exposed insulation
- Exhaust vent/s on the side of your home
- Propane tanks left by the side of your home
- Uneven concrete
- 3 or more steps with no hand rail
- Chemicals left out
- Trampolines
- Animals on the property – what kind and type
- Ladders that are over 6 ft and upright
- Holes in any fencing you may have or if the fence is leaning
- ADUs
- Tools or weapons that are stored outside – not properly stored away safely
- Clutter around the side of a home – anything that would prevent the walking access of a first responder
- Elevated porches with no railing
This is not a comprehensive list. For more information contact your insurance agency to determine what hazards they are looking for.
Home Safety Features
- Security Systems: Homes with alarm systems, security cameras, and deadbolts often qualify for discounts. Conversely, a lack of these features can lead to higher premiums.
- Smoke and Carbon Monoxide Detectors: Ensuring these detectors are installed and functional can lower premiums, as they reduce the risk of fire and poisoning claims.
Location and Environmental Factors
- Proximity to Fire Stations: Homes located far from fire stations or hydrants are considered higher risk, leading to increased premiums.
- Flood Zones: Properties in flood-prone areas often require additional coverage, which raises premiums.
Home Renovations
- Additions and Upgrades: Significant renovations or additions to your home can increase its value and the cost to insure it. Make sure to inform your insurer of any major changes.
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Factors That Can Get You Dropped
Non-Disclosure and Fraud
- Omitting Information: Failing to disclose relevant information about your property or past claims can lead to policy cancellation.
- Fraudulent Claims: Any attempt to deceive the insurance company can result in immediate termination of your policy.
Excessive Claims
- High Claim Frequency: Insurers may cancel your policy if you file an excessive number of claims, as this indicates a higher risk profile.
Increased Risk
- Dangerous Pets: Owning certain breeds of dogs that are considered high risk can lead to policy non-renewal.
- Business Use of Home: Using your home for certain business activities without informing your insurer can void your policy.
Failure to Address Hazards
- Ignored Recommendations: If a survey identifies hazards and you fail to address them, your insurer may decide to drop your coverage.
- Lack of Maintenance: Consistently neglecting property maintenance can lead to policy cancellation.
How to Maintain Affordable Coverage
- Regular Maintenance: Keep your home in good condition by performing regular maintenance, especially on the roof, plumbing, and electrical systems.
- Enhance Security: Install security systems, smoke detectors, and carbon monoxide detectors to reduce risk and potentially lower premiums.
- Disclose Information: Always be honest and thorough when providing information to your insurer to avoid policy cancellation.
- Limit Claims: Only file claims for significant damages to avoid being seen as a high-risk policyholder.
- Review and Update Policies: Regularly review your insurance policy and update it to reflect any changes in your home or lifestyle.
- Shop Around: Check multiple insurance companies to make sure you are getting the best rate for your area.
- Multi-Policy Discounts: Combine your auto and home insurance with the same company in order to get discounts on both policies.
Final Thoughts
Navigating the complexities of homeowners insurance can be challenging, but understanding the factors that influence premiums and the risk of policy cancellation is essential for maintaining affordable and continuous coverage. By staying informed about what homeowners insurance surveys evaluate, you can take proactive measures to reduce risks associated with your property.
Regular maintenance, updating home safety features, and ensuring full disclosure of relevant information to your insurer are critical steps in managing your insurance effectively. These actions not only help in keeping your premiums reasonable but also significantly reduce the likelihood of facing policy cancellation.
In the end, the key to maintaining a healthy homeowners insurance policy lies in proactive management and communication with your insurer. Addressing potential hazards, limiting the frequency of claims, and enhancing your home’s security can all contribute to a more favorable risk assessment during insurance surveys.
