What affects homeowners insurance rates

Homeowners insurance covers losses to your home or your belongings. With so many different insurance companies and types of policies to choose from, it can get confusing. So, what affects homeowners insurance rates? Below are some of the most important factors:


We’ve all heard it before, “location, location, location.” This applies to your homeowners insurance rate too. If you live in an area prone to natural disasters, or close to the coast or a body of water, you can expect to pay more for your homeowners insurance. The same may apply if you live in a high crime rate area.

If your home however is located near a fire department or fire hydrant, you may receive a lower rate.

Age, Size and Construction

Older homes, or ones that are not well maintained tend to have higher homeowners insurance rates.

Construction factors that may affect your insurance rates are whether the house was built with bricks or wood, how old the roof and electrical systems are, and if there are smoke detectors and sprinkler and security systems installed.

The size of your home also plays a big factor. The bigger your home and the more possessions (especially costly ones) you have, the higher your homeowners insurance rate will be.

Credit Score

Your credit score impacts almost any purchase you can make, and this includes your homeowners insurance. To ensure you get a low insurance rate, pay attention to any errors on your credit report and make sure to keep balances low and make payments on time.

Coverage and Deductible

The amount of coverage you decide to purchase will directly affect your homeowners insurance rate. If you have valuable items, additional dwellings (like a storage shed or pool house), or a pool, you may need additional coverage for those.

Your deductible is the amount you would need to pay out of pocket before your insurance pays. The lower your deductible, the higher your homeowners insurance rate will be. So, when deciding on a deductible amount, choose wisely. Your insurance rate may be reduced by as much as 25% when choosing a higher deductible.


Having too many claims on your policy can also negatively affect your homeowners insurance rate. Even if you have a new home, claims made on your previous property will “follow” you. Before making a claim, carefully consider if the amount of the claim would be worth the potential impact to the cost of your insurance.


Some things you may not have thought about that could affect your homeowners insurance rates are pets (especially exotic ones or dangerous breeds), trampolines, wood-burning stoves, a pool or hot tub, and home improvements. Similarly, if you work from home you may need to purchase additional coverage for your work equipment or electronics.

You may also qualify for discounts towards your homeowners insurance rates for things like smoke and carbon monoxide detectors, home security systems, impact resistant windows, etc.

It’s important to regularly review your homeowners insurance policy and coverage needs. This way, you can be sure you are paying only for what you need and that you are fully covered for any upgrades, new contents, or remodels.

If you need help reviewing your homeowners insurance policy or are looking to purchase new insurance for your home, a Preferred Link agent can help. Contact us today.