7 Big Factors That Affect Home Insurance Rates (2024)

FAQs

What factor affects home insurance premiums the most? ›

For example, homes that are closer to a staffed fire station tend to have lower premiums because in the event of a fire, it will likely be put out in a timely manner, minimizing the overall damage and cost to your insurer.

Maintaining a higher credit score and good credit can be perceived as lower risk, which can lead to lower home insurance rates.

A home's size, how and where it is constructed and the value of your contents significantly affects what you pay for home insurance.

A quick way to reduce your premium is to raise your homeowners insurance deductible, the amount you pay if you have to make a claim. If you have a $1,000 deductible, you could save an average of nearly 13% a year by increasing it to $2,500, according to NerdWallet's rate analysis.

Typically, the higher your credit rating, the less you will pay for home insurance in the states where credit is considered a rating factor. Although it is only one factor in setting rates for home insurance, data shows that the credit-based insurance score is an important one.

Travelers is the most expensive homeowners insurance company for $200,000, $350,000, $500,000 and $750,000 dwelling coverage amounts. Rates vary significantly among companies because they each have their own formulas for pricing. That means it's vital to comparison shop homeowners insurance quotes when buying a policy.

One of the most influential factors on premiums is the age of the home being insured. The older the house, the more expensive it may be to insure. An older home may have outdated wiring, faulty plumbing, or a leaky roof. All of these can lead to a possible insurance claim.

Unfortunately, paying off your mortgage doesn't reduce homeowners insurance premiums. You will no longer be required to carry home insurance as it isn't legally mandated, but your home will still require the same level of coverage to protect you from financial losses.

Why does my home insurance keep going up? ›

As inflation increases, insurance companies respond by raising rates. That's because the cost of items in your home will cost more than they did last year. As the price for appliances and equipment escalates, rates will adjust as well.

While an intense hurricane season has the potential to cause premium increases next year, Insurify predicts Americans will see a more modest premium increase of 6% in 2024, putting the average annual homeowners insurance rate at $2,522 by the end of the year.

Location The geographical location of your home is perhaps one of the most significant factors influencing your insurance premium. Insurance companies consider various aspects of your location, including weather risks, crime rates, and proximity to emergency services like fire stations.

Oklahoma is the most expensive state for home insurance at $5,317 per year, while Hawaii has the lowest home insurance rates, averaging $582 in 2024. States with more natural disasters, such as hurricanes, wildfires and tornadoes, usually have higher insurance rates.

Homes in high-risk areas typically have higher premiums. Insurance companies assess the risk associated with your area by looking at the likelihood of severe weather, such as floods, wildfires, and hurricanes, local crime rates, and your home's proximity to a fire station.

Location The geographical location of your home is perhaps one of the most significant factors influencing your insurance premium. Insurance companies consider various aspects of your location, including weather risks, crime rates, and proximity to emergency services like fire stations.

Explanation: Home insurance premiums are most directly affected by the number of claims in an area. Insurance companies use statistical data to determine the risk of claims in a specific area, which influences the premiums.

Some factors that may affect your auto insurance premiums are your car, your driving habits, demographic factors and the coverages, limits and deductibles you choose. These factors may include things such as your age and your driving record.

Some are personal factors, like your claims history. In states that allow it, credit history may also be used as a rating factor. Other factors are related to your home, like the ZIP code, year it was built, square footage, general condition and your property's proximity to a fire station, to name a few.