Why do bigger homes cost more to insure?
One of the things we all look for in a new home is how big the property is. Space is important. After all, more space usually means more comfort. If you want to live large, though, you’ll have to pay more for home insurance.
Replacement cost
This may seem obvious, but consider the fact that every square foot on your property has a dollar value. Bigger homes are worth more than smaller homes in the same area. The cost to replace the house or rebuild part of it costs more. More expensive homes represent a bigger risk to an insurance company – and that means you’ll have a higher cost to insure.
When you buy home insurance, you have to determine the value of everything inside your home on top of the value of the structure itself. Unless your home is large and empty, chances are you will have a larger number of possessions than an average-sized home. Once again, this represents a bigger cost to the company if your things need to be replaced, making you a greater risk.
Bigger house, bigger target
Whether or not it holds true in all cases, the reality is that a large property often means greater overall wealth. If you can afford a bigger home, you probably have valuable items inside. It’s why bigger homes make better targets for thieves looking to get their hands on household valuables. Of course, you can limit the risk of theft with a good security system, but that doesn’t mean an insurance company won’t charge a pretty premium for your home insurance.
Another consideration is lawsuits. There are those who are willing to sue someone they perceive as wealthy because they think they can get a bigger settlement. If you have a big house, someone hurt on your property might be more inclined to sue you for a bigger number. This is why some people choose to purchase umbrella insurance on top of their homeowner’s coverage.
Conclusion
Size isn’t the only factor in determining the cost to insure your home, but it is a big deal. If you push your monthly budget to its limit by buying the biggest house you can, you may find yourself overwhelmed when it comes to meeting the carrying costs of homeownership such as the
insurance premiums.
Save money on your home insurance by comparing providers and educating yourself about the industry. When it comes time to insure your home, you know exactly what you’re paying for and why it matters that you do make those payments.