Qualifications for Homeowners Insurance

The condition of the home affects homeowner's insurance rates.

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Homeowner’s insurance protects your investment in your home and provides you with insurance coverage against damages that may occur to the property. Each insurance company offers policies designed to provide various forms of coverage for the home. Insurance companies must also comply with state requirements in determining how the insurance policies are offered to homeowners. The requirements to obtain homeowner’s insurance depend on a variety of factors, including the type of policy and the condition of the home.

Underwriting Guidelines

Your application for homeowner’s insurance will undergo an underwriting process to determine your eligibility for coverage and the mortgage rate. The underwriting guidelines are specific to each insurance company. The insurance companies establish standards to determine whether applicants fall within an acceptable risk for insurance coverage. Some states also permit insurance companies to evaluate your credit score and credit history to determine the amount of your monthly premiums. Putting together all of the factors, the insurance company will include prior insurance claims and the overall construction of the home to ascertain your qualifications for insurance.

Location of the Home

The location of the home is an important factor in determining the amount of your premium and whether the property is within a high-risk zone for unforeseen events that may cause damages to the home, such as properties situated along the coast and dense forest areas. The insurance company will consider the distance of the property to available resources, such as the fire department and water resources. Other factors that may cause your premium to increase are properties located in high crime areas and areas that are prone to severe weather conditions. The location of the home may not necessarily prevent you from obtaining homeowner’s insurance. However, the location plays an important factor in determining whether you will receive low insurance rates or higher than average rates.

Home Construction and Maintenance

Your eligibility for homeowner’s insurance will depend on the overall maintenance and upkeep of the outer portions and interior of the home. The insurance company will perform an inspection of the home to determine whether the home meets the standards for homeowner’s insurance. The age of the home and the condition of the roof are important factors. The roof will be inspected to determine if its condition poses a high risk of possible deterioration and other unavoidable damages. If the roof is in poor condition, you may either be disqualified from coverage or be offered higher insurance rates. Other property conditions that affect your ability to acquire coverage include the condition of the walls within the home, the electrical and plumbing system and the outer frame of the home.

Liability Exposure

Certain items on your property may trigger higher insurance rates or disqualify your eligibility for coverage, or the insurance company may require you to install safety equipment to protect your home prior to receiving insurance coverage. Providing the necessary repairs to comply with local building codes, installing equipment to protect the security of the home, such as smoke detectors, burglar alarms and sprinkler systems and insulating your home against weather changes, such as installing storm windows can help to lower the costs of homeowner’s insurance premiums and deductibles.