Estimates

Why are my house insurance estimates so high?

We're buying our first house & our mortgage guy estimated our costs for house insurance should be $400-500. We've gotten two estimates & they were $730 & $775. What could be driving up the costs that none of us expected? The home was built in 1920, has wood siding, & is in city limits (near hydrants). The only other factors I can think that may raise the price are the fact that the fire station is on the other side of the rail road tracks, the fact the home is situated on a State Route/high traffic road, & close to a bar... Or is there somthing more?

Public Comments

1. There are a lot of different factors entering into the computation of your insurance rate which make answering your question very hard. But first, as a first time homeowner, how do you know the estimates are high? Your mortgage person calculated an estimate probably based on a lot less info than the insurance companies used. Does the house have smoke alarms? Does it have a security system? Does it have deadbolt locks? Do you have dogs that insurance companies don't like? etc, etc. Instead of wasting your time here, go back to the insurance companies and ask them why it is high and what you can do to lower it.
2. Oh, if the roof, plumbing, wiring, or furnace is over 20 years old. If you have a credit score under 700. If you've had any prior property losses. The bar doesn't matter. It's going to be age of updates, with a house that old, prior claims, or credit. Either that, or the cost to rebuild is much higher than the market value - those older houses tend to have GORGEOUS trim all through the inside, and hardwood floors throughout.
3. The bankers always underestimate the cost of insurance. There are so many factors that go into a quote that no one is able to ballpark a figure any longer. The quotes don't sound out of line but the figure that the banker gave you does
4. Your mortgage guy deals with mortgages, not with insurance. For him to try and estimate the cost of a product that he doesn't sell is idiotic. Insurance professionals base their quotes on underwriting factors such as: the replacement cost of your home; prior (or no prior) insurance; verifiable claims history; location of the home; age of home and if there have been any updates to the home; number of families living in your home; age of owners; alarms; how the home is heated; and many other factors. Without knowing more about the insurance rates for homes in your area, no one here can say whether that figure is high or low. All anyone can say is your mortgage guy pulled a number out of their butt.
5. Insurance is different in a lot of states, it depends on the risks within the state. And MANY factors within your home, plumbing, electricty, roofing, when were these last updated? Your mortgager is basing a quote off of your house iwth just general information, and they are just a mortgager, the agent would know better for a correct quote. Ask "What could be done to lower the premium?"
6. There are a few factors that can make the cost go up If the home was built in 1920 and depending on updates on the electrical wiring that can make it go up higher since it is more of a fire hazard. If it is near water as well that can make it go up as well fire places and wood stoves. I use to do insurance and those were some of the factors that can make it go up. Check with a few more companies you might be surprised and find a cheaper one.