9 Major Factors That Determine the Cost of Homeowners Insurance

large golden piggy bank9 Major Factors That Determine the Cost of Home Insurance 

Here's a quick look at the 9 main factors that determine the cost of your home insurance:

  1. Roof Shape and Recent Roof Updates
    A large factor driving a lot of your premium can be what your roof shape and age. Flat roofs are more expensive to insure. If your most recent roof update was over 15 years ago, carriers will charge more. The age of the roof can determine if your roof is replaced at Replacement Cost or Actual Cash Value. Anything older than 20 years and carriers get worried they will be paying for a brand new roof next time the wind blows. 
  2. The Home's Age
    Home insurance companies will charge more if your home was built more than 40 years ago. Older construction can be more prone to issues and older materials are often harder to replace.
  3. Your Location
    If you are within 5 miles of the coast, you are going to see a coastal surcharge. On the flip side, homes positioned near fire stations are comparably cheaper to insure. 
  4. The Construction Material
    Brick, wood, adobe, pick your favorite material. Just don't pick wood - log cabins burn fast.
  5. Your Credit Score
    As with most financial products, higher credit scores earn more discounts while lower scores can require more money up front and result in a higher premium.
  6. Frequency of Claims
    No claims in the last 5 years is great. One claim is OK. If you have 2 or more, you are going to get charged extra. Some claims matter more than others. Water-related claims and theft are especially expensive to file - expect your future premiums to go up. In general, try not to file a claim unless it is 2x-3x your deductible.
  7. The Deductible
    Home insurance providers slash premiums by upwards of 15% for customers with higher deductibles, so compare the difference in price between a $500, $1,000, and $2,500 deductible policy.
  8. Home Security System
    Homes with security systems or other smart home devices are less likely to see a burglary claim. Simple.
  9. Preventive Maintenance
    Home improvement projects are great. Clean your gutters, update your roof, and get your heating unit checked from time to time. Carriers often give discounts if your Heating, Electrical, or Wiring have been updated recently.  (more relevant for older homes)

Bonus: High value items. Homeowners who own valuable items such as expensive jewelry or an art collection will likely have to schedule additional coverage, which is insurance lingo for: more coverage, more money. Here are the standard sub-limits for special item categories:

home insurance special sub-limits

Those 9 factors have a large impact on the cost of your home insurance. Happy shopping!

At your service,
Young Alfred