7 ways to improve your finances during Financial Literacy Month

April is tax season, so a lot of people are thinking about their finances these days. But if you’re like most people, you’re probably thinking in the short term: What’s my refund going to be—or how much do I owe? And what is that going to do to my monthly budget?

It’s good to be thinking about those things. It’s also important to look at the bigger picture. Financial Literacy Month, which is also in April, gives you the perfect chance to do just that. Surveys have showed that an alarming number of Americans lack even basic financial knowledge; in an era when we collectively have trillions of dollars in consumer debt, and many people live paycheck to paycheck, that can be a recipe for disaster. But it doesn’t have to be that way! This Financial Literacy Month website, created by nonprofit credit-counseling firm Money Management International, features tools and resources to help you understand your finances better and build a bright financial future. In that spirit, we’ve come up with seven tips that can help you become more savvy with your money. Some are easy things you can do today. Others might take a little more work. But all are worth the effort!

1. Make your saving automatic. It’s important to have money set aside for emergencies—and to save for retirement. But once your paycheck hits your account, it can be a lot easier to just spend it all. The solution? Schedule automatic transfers to a separate account for your emergency fund, your retirement plan, or both. Start with something like 10%. You might even find that you don’t miss it.

2. Pay your credit cards off every month. If you can’t do this now, pay them down until you can. One popular way is the “snowball” method, which in a nutshell, works like this: Make only the minimum payment on all of your debts—except the smallest one. Put as much money as you can toward that. When the smallest debt is paid off, repeat the process and continue until everything is paid!

3. Check your tax withholding. People love getting big tax refunds, but that really means you’ve loaned the government your money over the course of the year—interest-free. For example, instead of a $2,500 refund in April or May, you could have more than $200 extra in your paycheck every single month. Wouldn’t that be nice?

4. Don’t throw away free money. Who would do that? Well, you—if your employer offers a match on your retirement savings and you don’t contribute enough to get the full amount. Say your company matches the first 3% of salary you contribute to a 401(k); you should save as much as you can, but at the very least, you’d want to save that 3%.

5. Pay less for services. Are you paying more than you should for cable, internet or your mobile service? Maybe not—but you won’t know unless you ask. Often, companies have discounts or special packages available, especially if you’re a loyal customer and you haven’t been on a promotional deal for a while.

6. Consider a credit card that rewards you. This can be a great way to earn points toward free travel or other rewards, just for buying the things you would buy anyway. Don’t spend more than you normally would just to get rewards, though. And remember, if you regularly carry a balance, the rewards probably won’t outweigh the interest you’re paying. (Go back to item #2 in our list.)

7. Track your spending for a while—and then review it. You probably spend money on a lot of little things without realizing how much it adds up. Maybe you get takeout for lunch a couple of times a week, or stop for coffee every day on your way to work. Try tracking everything you spend for a month or two. Then, take a look at your habits.

You’ll find areas where you can save, likely without even feeling like you’re making a sacrifice. Insurance is an important tool for your financial well-being, too. Even though it’s easy to think of insuring your car or home as protecting your “stuff,” insurance really protects your finances. After all, insurance can’t prevent your car from being hit by another driver—but it can pay for the repairs, so that money doesn’t come from your pocket.

Take a little time to think about your finances this month, and try one or more of the tips above. As with many things in life, when it comes to money, small steps can have a big impact!

©Safeco
Source: https://www.safeco.com/blog/financial-literacy

WHAT TO DO IF YOU’RE IN AN ACCIDENT

We spend a lot of time in our cars, with the average American driver covering over a 1,000 miles a month. That is a lot of driving! With all those miles traveled you may find yourself in the unwanted situation of a car accident at some point in your life.
Read the tips below to learn what you should do if you’re involved in a car accident:
• Stay calm
– Keeping a normal demeanor helps you stay in control of the situation.
• Make sure you and your passengers are OK
– Move as far off the roadway as possible, but stay at the scene of the accident. Warn oncoming traffic by activating your hazard warning lights and/or setting flares.
• Call the police
– Call 911 or the appropriate emergency number to report the accident.
• Contact your insurance company and report the claim
– The sooner your insurance company knows about the accident, the sooner they can start working to resolve your claim.
• Do not admit fault
– Do not discuss the car accident with anyone other than the police and your claims representative.
• Exchange vital information with the other driver involved in the car accident
– Write down the name, address, phone number and license numbers for all drivers and witnesses, particularly those who were not riding in a vehicle involved in the accident. Ask for the insurance companies and policy numbers for drivers involved in the car accident.

source: Progressive

When – and Why – You May Need Umbrella Insurance ⛱

Here are a few cases when an umbrella policy is essential:

• Passenger Injuries
Driving around with friends, it can be easy to get distracted and go a little too fast. If an accident occurs and passengers are seriously injured, medical expenses can add up quickly – potentially totaling more than what an auto policy would cover. Without an umbrella policy, any liability expenses beyond the auto policy limits may be the driver’s responsibility.

• Dog Bites the Neighbor
Responsible dog owners take the time to train and socialize their pets. However, even breeds that aren’t typically associated with aggressive behavior can suddenly act out, despite our best efforts. If a pet badly injures a neighbor, the cost can go into the millions between medical bills and future disability.

• Faulty Furnace
Being a landlord is tricky business. Even with the most responsible management, rental properties can be a minefield of possible claims. If a furnace starts malfunctioning, a tenant may sue for brain damage caused by carbon monoxide poisoning. While all landlords should maintain their property and make repairs as needed, having a safety net in case of a major liability claim is equally important.

source: SafecoInsurance

GET A FREE AUTO INSURANCE QUOTE!

☎ Call us now: 505-807-AUTO(2886)
📩 Email: admin@swfins.com

THE BEST TIMES TO EVALUATE YOUR CAR INSURANCE 🚗

It’s good practice to reevaluate your car insurance coverage once or twice a year, because many life changes can adjust your premium payments. The rate you pay for car insurance isn’t set in stone because it’s based on so many factors that can change over time.

Here are the best times to evaluate your car insurance and see if you’re getting the best deal for your needs:

• When you buy a new car
-You have a grace period of about seven to 30 days (depending on your insurance policy) to inform your insurance provider that you bought a new car, but you can also shop for policies before you buy. You must get a policy on your new car by the time your grace period ends, or you risk driving without insurance.

• When your family situation changes
-Changes to your family mean changes to who is on your insurance policy. If you get married, this can affect your insurance rates (generally being married lowers rates). Adding your spouse to your policy can increase or decrease your payments, depending on their driving record. Even if your spouse doesn’t own a car and rarely drives, it might be worth it to add them to your policy to lower your rates.

• When your premiums go up
-If your premiums increase and there have been no changes to your driving record, it’s worth checking to see if you’re getting the best coverage for your money. This might be time to compare your current insurance provider with others to see if you can find a competitive rate.

source: SafecoInsurance

GET A FREE AUTO INSURANCE QUOTE!

☎ Call us now: 505-807-AUTO(2886)
📩 Email: admin@swfins.com

ways to save on your home insurance

By Stephen Donohue and Atlantic Insurance & Benefit Company

This post is part of a series of insurance blogs on Safeco.com showcasing the expertise of local independent agents and aimed at helping you understand insurance coverage and other important issues

If you feel like you’re paying more for homeowners insurance than you used to, you might be right. Over the past 20 years, these rates have increased over 50% – and U.S. homeowners pay an average of $952 annually, according to ValuePenguin, which provides consumers with research and guidance on financial topics.

You want to make sure your home is protected, but you don’t want to pay more than you have to, either. Here are eight things you can do to make sure you get the best deal on homeowners insurance:

Shop around. Rates can vary dramatically from one company to another – and there are hundreds of different insurers that offer homeowners insurance. If you haven’t researched the market in the past 24 months, it makes sense to shop. Your local independent agent can help, and since they aren’t tied to one insurance company, they can offer you plenty of options.

Increase your deductible. Many policies are written with a $500 deductible, but depending on where you live, you could save 10% or more by increasing your deductible to $1,000. This one change can help significantly reduce or even eliminate your annual premium increase altogether. And some people opt for even higher deductibles, all the way up to $5,000 – but they need to be diligent about keeping funds set aside in case they need to file a claim.

Don’t file small claims. If a homeowners claim would cost less than $1,000, it probably doesn’t make sense to file it. Insurance companies track customer claims, and even a claim of a few hundred dollars could cause a client to miss out on “loss-free” discounts.

Don’t file small claims. If a homeowners claim would cost less than $1,000, it probably doesn’t make sense to file it. Insurance companies track customer claims, and even a claim of a few hundred dollars could cause a client to miss out on “loss-free” discounts.

Maintain good credit. In most states, insurers offer discounts to applicants with high credit scores, so keeping a solid credit history can lower your insurance costs. To protect your credit rating, pay your bills on time, keep outstanding balances low, and monitor your credit report regularly.

Review your policy carefully. You likely are eligible for a number of discounts and credits, so make sure you get them! Homeowners often receive discounts for having newer homes, multiple policies with the same company, good credit and a clean claims history. Even your proximity to a fire hydrant might save you money. And if your situation has changed, let your insurer know immediately as you could be eligible for even more discounts.

Look into group insurance discounts. Some organizations offer special insurance programs to employees, usually with discounts of 5% to 10% and features such as payment via payroll deduction. You also may qualify for discounts if you are a member of a union, auto club, alumni association, or professional group.

Improve your home security and safety. Deadbolts, burglar alarms, and other security devices are all ways to keep your home safe and potentially lower your insurance costs. For example, an alarm that connects to police, fire, or other monitoring stations can save you as much as 20% on your homeowners premium.

Keep in mind that different companies offer different discounts, and your options might vary depending on where you live. An local independent agent who knows your market can help you find the best coverage at the best price for your needs.

Now that you’ve got some ideas on how to save on your car insurance, you may want to check with your carrier to review your coverage. You can get a quote from Southwest Federal Insurance.

Driving Safety

Our driving safety tips will help you develop safer habits that can protect you, your passengers and your vehicle.

We give you the facts about safety equipment, and we keep you informed about the most important driving safety tips, including how to handle accidents and emergencies, how to keep your family safe when you’re on the road, and more.

Driving safety tips and resources include:

Cell phone safety

Though we don’t recommend it, if you must use your cell phone while you’re behind the wheel, follow these cell phone driving safety tips.

Safety equipment

Get the facts on seat belts, air bags and head restraints to make sure you’re properly protected every time you hit the road.

Car accident tips

These driving safety tips can help ease your stress if you’re involved in a car accident.

Emergency kit checklist

Make sure you have the right driving safety items in your car before you have a roadside emergency.

IIHS car safety ratings

Certain cars have higher safety ratings. Click the link above to see more on IIHS safety ratings.

Now that you’ve got some ideas on how to save on your car insurance, you may want to check with your carrier to review your coverage. You can get a quote from Southwest Federal Insurance.

How to Lower Car Insurance Costs

Having enough car insurance to cover potential losses is important for any car owner, but no one likes to spend more money than necessary. Consumers can take advantage of the fact that insurance companies are highly competitive. The Insurance Information Institute notes that annual policy costs can vary by hundreds of dollars, depending on the make and model of the car you drive and the insurance company you choose.1

Here are five tips for reducing your car insurance costs:

1. Seek Multiple Insurance Quotes

Before you buy car insurance, get at least three insurance quotes. The more comparisons you make, the better chance you’ll have of saving money.

Each insurance company has its own formula for calculating car insurance rates. They place different levels of importance on such factors as the type of car you drive, annual mileage, your age, your gender, and where you garage your vehicle(s).

Be sure to compare apples to apples when shopping for car insurance, advises Edmunds.com.2 Some less expensive policies may lack the coverage you need. For example, comprehensive protection pays to repair car damage from mishaps other than collisions, such as vandalism or fire. If you want this type of protection, you must buy a policy that includes this coverage.

2. Ask About Discounts


You’ll miss an opportunity to cut car insurance costs if you don’t ask about discounts. They’re available for a variety of reasons, such as meeting low-mileage thresholds, having a good driving record, using anti-theft devices, and completing driver education courses. There also are loyalty benefits for staying with the same company for a certain number of years. Teen drivers often receive discounts for getting good grades.

You can’t take advantage of discounts if you aren’t aware of them. To make sure you’re saving as much as possible, CBS News suggests that you ask your insurance agent or carrier to tell you about all available discounts.3

How to lower car insurance quote

3. Pay Your Bills on Time

Car insurance companies often consider credit histories when setting their rates. If you have a low credit score with the three major credit bureaus — EquifaxExperian and TransUnion — you may be penalized. Many insurers rely on credit bureau information when creating their own credit-based insurance scores for consumers.

A good way to improve your credit history is to pay your bills on time. Under federal law, you can obtain one free credit report each year from each of the major credit bureaus. Review your credit reports carefully to make sure they don’t contain errors.

Be aware that not all states allow insurers to use credit information to calculate car insurance rates. According to the Insurance Information Institute, states that restrict the use of credit histories in auto insurance rates include California, Hawaii, and Massachusetts.4

4. Consider Using the Same Insurer for Multiple Policies

Many insurance companies will reduce your rates if you purchase two or more types of insurance from them, such as car and homeowner policies. This is known as “bundling.” It offers the convenience of having just one insurance company to contact if you have questions about policies.

Bundling can save you money, but it isn’t always the best alternative. Before you agree to bundling, Equifax suggests that you shop around to see if you can get a better deal by purchasing your policies from separate carriers.5

5. Choose Your Car Carefully

Before you buy a car, it’s important to make sure you choose one that you can afford to insure. Insuring inexpensive vehicles costs less because they’re less costly to repair or replace following accidents.

According to Forbes, the cheapest types of cars to insure are family-oriented minivans and sports utility vehicles.6 New vehicles are more costly to insure than used ones.

Your insurance rep can help you determine the insurance costs for various makes and models that interest you.

Now that you’ve got some ideas on how to save on your car insurance, you may want to check with your carrier to review your coverage. You can get a quote from Southwest Federal Insurance.

Sources:
1 http://www.iii.org/article/how-can-i-save-money-auto-insurance
2 http://www.edmunds.com/auto-insurance/10-steps-to-buying-auto-insurance.html
3 http://www.cbsnews.com/news/are-you-missing-out-on-car-insurance-discounts/
4 http://www.iii.org/issue-update/credit-scoring
5 http://blog.equifax.com/insurance/do-i-really-save-money-bundling-insurance-policies/
6 http://www.forbes.com/sites/jimgorzelany/2016/02/23/the-cheapest-2016-cars-to-insure/2/?ss=vehicles#775418ea161c

How to Choose Car Insurance in 4 Steps

Because there are so many companies selling car insurance, sorting through all the choices to find the right policy for you and your family can be a challenging task. With each carrier claiming to offer the best value, it’s easy to feel confused. At first glance, all of the policies may look the same, but there are important differences you may need to consider. Your goal should be to find one that includes all the benefits you need at a competitive price.

Follow these four steps for finding the best car insurance policy for you:

1. Determine the Level of Coverage You Need

The cheapest policy may not be the one you need. Inexpensive plans may not provide collision coverage, which pays to fix your own car following an accident. They may not offer comprehensive coverage, which covers damage to your car not caused by auto accidents, such as natural disasters, theft or vandalism.

The nonprofit Insurance Information Institute notes that all states except New Hampshire require property and bodily injury liability coverage.1 A policy that offers only the minimum amount of liability protection required by law may save you money, but it probably won’t cover the legal claims that can stem from serious accidents involving property damage or injuries.

Remember that not everyone’s insurance needs are the same. For example, if you’re leasing a car, you may need gap insurance. If the car is totaled, gap insurance covers the difference between the actual cash value of the vehicle and the outstanding balance on your lease.

2. Review the Financial Health of Car Insurers

Everyone wants a good deal on their auto insurance policy, but low rates won’t do you any good if the company you choose isn’t around to pay its claims. Online reports from independent ratings companies, such as A.M. Best, Fitch, Moody’s and Standard & Poor’s, can help you determine your insurer’s financial health, says Investopedia.2

Each ratings agency uses its own standards for evaluating insurance companies and their financial health. 

3. Compare Several Car Insurance Quotes

You can shop for insurance by going online, using the telephone or working directly with insurance agents. A report by Bankrate says getting multiple quotes is important because prices for the same level of coverage vary greatly.3 That happens because insurance prices are based on risk. Each carrier has its own formula for measuring the policyholder’s risk for filing claims.

Some insurers rely heavily on insurance scores to determine how likely policyholders are to file claims. Other companies may give more weight to the type of car you drive and how expensive it would be to repair following an accident.

Where you live also can be a factor in determining what you pay for car insurance. If your ZIP code has a higher-than-average rate of car accidents, your insurance costs could be higher. 

4. Ask About Discounts

Many insurance companies offer discounts, notes MarketWatch.4 If you have a teen with good grades on your auto policy, he or she may qualify for a reduced insurance rate. Some insurers offer discounts to drivers who meet annual low-mileage thresholds or take driver education classes. If your car has an anti-theft device, that also could qualify you for a discount.

Be sure to ask to request a list of all available discounts. It could make a big difference in how much you pay for your policy.

Now that you’ve got some ideas on how to save on your car insurance, you may want to check with your carrier to review your coverage. You can get a quote from Southwest Federal Insurance.

Sources:
1 http://www.iii.org/article/auto-insurance-basics-understanding-your-coverage
2 http://www.investopedia.com/terms/i/insurance-company-credit-rating.asp
3 http://www.bankrate.com/finance/insurance/tips-for-getting-car-insurance-quotes.aspx
4 http://www.marketwatch.com/story/11-little-known-car-insurance-discounts-2013-10-22?page=2

10 Ways to Save on Your Car Insurance

Car insurance is a necessary expense for many people, and there are a variety of ways to save on this household cost once you know what it takes. To get started, gather your personal information, determine your budget and then consider the insurance coverage that you think will best safeguard you and your lifestyle.

Here are 10 ways to save on your car insurance:

1. Gather Specifics About Your Car and Its Primary Drivers

One way to begin the process of shopping for car insurance to get the most value for your money is to gather all of the information an insurance carrier needs to offer you the best possible rate. Start by compiling this basic information before you shop for quotes:

– Make and model year of your car. You’ll find it on your car’s registration.

– Vehicle Identification Number, or VIN. This is located on the inside of the driver’s side door pillar.

– Your car’s safety features, including lane departure warning system, forward-collision warning and a back-up camera.

– The anti-theft devices you use, including such mechanisms as an electronic tracking device or a steering wheel lock. Along with understanding the anti-theft features, you’ll want to take note of where you will be parking your vehicle. Consider the difference between parking your car in your garage versus parking it on the street or in locations outside of your home.

– An estimate of how many miles you drive annually, plus your home and work addresses.

– A list of everyone who will drive the car, their ages and any driver safety courses they have completed. Many insurance companies also want to know who in your household is of legal driving age, what their license status is (such as whether they have a learner’s permit or a suspended license, for example) and whether other drivers in your household have their own insurance. Depending on the state, this can help the insurance agent determine who should be listed and considered for your quote.

With this information, an insurance carrier can suggest the best coverage and rates for you and your lifestyle.

2. Research How Much Car Insurance Costs Before You Buy or Lease

When you buy or lease a car, it can be tempting to get a brand-new car or trade in your practical family vehicle for a sports car. Just keep in mind that the type of car you drive may impact your insurance coverage and rate. Be sure to check the cost of insurance before you finalize your car purchase or lease. Insurance rates may vary widely depending on the type of car, repair costs, safety record and many other subjective points.

3. Research All Car Insurance Coverage Requirements

Each state has specific requirements for car insurance coverage.3 Coverage may become more complicated when a financial institution owns the vehicle you drive, so if you’re taking out a loan to make the car purchase, keep in mind that the lender may require you to have specific insurance that might otherwise be optional.4 One example is collision insurance that pays for the repairs of damage to your car sustained during an accident. Another example is comprehensive coverage, which typically covers the loss of the car for theft, fire and other damage due to non-accidents. Find out what coverage you need and the cost before you buy or lease.

4. Decide What Additional Coverage You Need

It may seem counter-intuitive but buying additional car insurance coverage may save you money.5 Weighing the options for additional coverage will help you to ensure you are well protected. Consider how your finances might be impacted if you’re involved in an accident, and the injuries or damages exceed the amount covered by insurance. You purchase car insurance to help protect against the potential costs of a theft or accident, so be sure to talk to your insurance agent or carrier for professional guidance on the appropriate level of coverage for you.

In addition, there are other coverage options that may save you money. What if your financed car is totaled? Can you afford to pay the entire loan? In this case, you may want to consider GAP insurance, which covers the difference between what your vehicle is currently worth, which is what your standard insurance typically will pay, and the amount you owe on it.

5. Save Money with Accident Forgiveness

Having a clean driving record is one thing that typically can help you to qualify for lower premiums. But there are times when even a good driver can have an accident. You may want to consider looking into potential savings through Accident Forgiveness and Minor Violation Forgiveness, if available in your state. These optional features can help you avoid a premium increase following your first covered accident or minor violation. There are also other features that can help provide peace of mind, such as Decreasing Deductible and a Total Loss Deductible Waiver. Ask your insurance agent about these plans, if you fit the bill as being a responsible driver because of your good driving record. Some carriers – in select states – also offer a program that uses smartphone technology to capture and score driving behavior of drivers covered on your policy, which could result in savings both in your first term and at renewal. It’s another option to explore when you’re a good driver and looking to save on your car insurance.

6. Determine What Car Insurance You May Not Need

If you own an older car and are looking to trim your expenses, you may consider dropping collision and comprehensive coverage. You’ll want to consider how much your older car is worth when you consider the cost of your premium including collision and comprehensive coverage. Be sure to also consider your individual driving situation to base your cost-cutting efforts on all the factors that could help you determine if this is a wise choice for you. With an older car, you may be paying premiums that total more than your car’s value. Typically, if your car is worth less than 10 times the insurance premium, it may not be cost effective to keep that part of your coverage.

7. Life Cycle Events Can Save Car Insurance Costs

One thing you can count on is that life will sometimes bring changes in your lifestyle and circumstances, so it’s smart to consider how these changes may or could affect your car insurance costs. For example, did your child go away to school? Perhaps there’s a Student Away at School discount you can explore. Did you buy a home? Maybe you can explore a Multi-Policy Discount and get the benefit of bundling your policies. These are some of the events that may help lower your car insurance rate. It’s a good idea to notify your car insurance agent when you have a major life event such as these, to have a conversation to ensure you’ve got the best coverage for your current life needs.

8. Choose the Deductible That Is Right for You

Your car insurance deductible is the amount you’ll pay out of pocket before your insurance kicks in. The lower the deductible, the less you’ll pay out of pocket if an accident occurs. Selecting a higher deductible may lower your car insurance premiums.

For example, if you choose a $1,000 deductible and have an accident causing $2,000 in damage, you would pay the first $1,000 of a covered loss before insurance kicks in.

9. Compare Car Insurance Companies and Costs

With many things we buy nowadays there are choices. Many of us wouldn’t think of buying a product or service without comparing prices, the value you get for your money, and the reputation of the provider. You may want to consider using the same philosophy when you purchase car insurance. Do your homework and then talk to your insurance agent or carrier about what your needs are.

10. Ask Your Agent About Available Discounts

It’s a good practice to check in with your insurance agent at least annually to find out if you are eligible for a better car insurance rate. You may receive discounts if you bundle coverage, such as buying insurance for your home and car from the same company. As mentioned earlier, safe driving records and extra safety features on a car may also lower rates. Ask your insurance agent about any new offerings or gaps in your coverage to determine the best coverage for you.

Now that you’ve got some ideas on how to save on your car insurance, you may want to check with your carrier to review your coverage. You can get a quote from Travelers or find an agent here.

Sources:
1 
https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
2 https://www.iii.org/article/8-questions-to-ask-before-buying-auto-insurance
3 https://www.dmv.org/car-insurance.php
4 https://www.iii.org/article/insuring-leased-car
5 https://www.iii.org/article/auto-insurance-basics-understanding-your-coverage
6 https://www.iii.org/article/what-gap-insurance
7 https://www.iii.org/article/how-can-i-save-money-auto-insurance#Reduce%20optional%20insurance%20on%20your%20older%20car
8 https://www.iii.org/article/choosing-an-insurance-company
9 https://www.iii.org/article/how-can-i-save-money-auto-insurance

5 MYTHS ABOUT HOME INSURANCE

Homeowners insurance includes many myths and preconceived notions that can make the home buying process confusing and intimidating for first-timers. However, demystifying homeowners insurance may be easier than you think. Take these five common home insurance myths into consideration before buying your first home to help ensure a smooth process.

Myth #1: The surrounding neighborhood doesn’t affect the price of home insurance.

Contrary to popular belief, the cost of a home’s insurance premium is influenced by its surrounding area. Each neighborhood has a record of multiple factors that insurance companies take note of, including prior insurance claims and crime rates in the area.

Based on statistics provided by the FBI, the state, and other departments, each community is given a grade by insurance companies. The frequency of crimes, like burglaries and vandalism, within a community is compared against the city’s population. Neighborhoods with lower grades are considered higher risk, and homes within these areas will often have higher premiums.

Myth #2: External home fixtures don’t affect the price of insurance.

The physical structure of a home isn’t the only factor involved in home insurance. When it comes to calculating premiums, insurance companies consider every potential risk on the property. Homes with trampolines and swimming pools carry a higher risk of claims due to injury or property damage and are subject to higher premiums.

Dog owners may also be surprised to learn that they could face higher premiums. Although many domesticated dogs are friendly, insurance companies pay close attention to the risk of bites and other injuries.

Myth #3: Older, cheaper homes will have lower insurance premiums.

Though an older home may have a lower sale price, it may have a much higher insurance rate. Older homes are considered high risk to insurance companies for many reasons. Homes built in the ’80s and before may have outdated plumbing, and water damage and leaks are among the most common home insurance claims.

Another concern with older homes is the wiring system. Older homes may have aluminum wiring installed, which is susceptible to fire. Outdated wiring systems also may not be up to current state code, which can further drive up the price of a premium.

Myth #4: Homes within the same neighborhood will have the same premium.

Though the neighborhood a home is located does influence its premium, many factors could cause one house to pay a vastly different amount than even the one next door. For example, brick houses are at lower risk of fire damage than homes with wooden frames. However, homes with fiber-cement siding are fire resistant and have an added benefit of being termite proof.

It’s important to note that homes within earthquake-prone zones are evaluated differently. Brick houses are more prone to damage from earthquakes and will pay higher premiums than homes made of other materials within these areas.

Myth #5: Once a premium is calculated, the price is fixed and can’t be changed.

A homeowner has plenty of options to reduce the cost of their home insurance premium. Updating the roof to hail-resistant shingles, for example, will impress an insurance company. Additionally, installing security features such as a fence or alarm system will decrease both the risk of claims and the cost of your premium. Installing a sprinkler system to reduce the risk of fire damage is another way to make an insurance company happy, and they’ll reward you — by lowering your premium.

Now that you are armed with insider knowledge about the way homeowners insurance works, you can begin the hunt for your first home with confidence. If you have questions about homeowners insurance or are interested in quotes, an independent insurance agent can help you. Visit trustedchoice.com to get matched up with an independent insurance agent today, so they can help you get started on your journey.