Significant Factors Affecting the Cost of Homeowner Insurance in 2022

Factors Affecting the Cost of Homeowner Insurance

Insurers evaluate your risk and likelihood of filing a claim when you apply for homeowners insurance. After determining your level of risk, the insurer will group you with policyholders who share similar risk characteristics. The insurer will then assign a rate based on your risk group’s claims history.

Cost of Homeowner Insurance
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Factors to Consider for the Cost of Homeowner Insurance

Previous claims

If you or your property have had any prior claims under a homeowners insurance policy (even if you were not the owner of the property at the time of the prior loss) or, if it is a new policy, under your automobile insurance policy, the date(s) of any prior claims, the nature of the claim(s), and the amounts paid by insurance for each claim. An insurer may not classify or keep an insured in a classification that requires a higher premium because of a specific claim for more than three years.

The construction type

In general, frame houses cost more to insure than brick houses.

The home’s age

In general, newer homes are less expensive to insure than older homes.

Local fire protection access and quality

Your “fire protection class” is determined by the distance between your home and a fire hydrant, as well as the capability of your local fire department. In general, insurers use protection classes to either increase or decrease someone’s premium.

Also Read: Types of Homeowners Insurance Policies and Homeowner Insurance Policy Coverage Types

The extent of coverage

Your policy’s dollar limits (the amount of coverage) will influence the amount of your premium. In general, the higher the limits, the higher the premium.

A lender’s required level of coverage

Your lender may not require you to insure any real property in an amount greater than the dwelling’s replacement cost. Remember that your mortgage includes the value of your land; your homeowners insurance only covers the structures on your property and their contents, not the land. If the loan amount exceeds the replacement cost of your home, the lender cannot require you to obtain insurance in the amount of the loan.

The amount of the deductible

The deductible is the amount you will pay if you file a claim and the insurer pays you; the insurer’s payment to you will be reduced by the amount of the deductible. Because the deductible reduces the amount an insurer pays on a claim, the higher the deductible, the lower the premium.


Some insurers provide policy premium discounts for actions such as purchasing multiple policies (e.g., home and auto) from them and/or installing deadbolt locks or alarm systems in your home.

Cost of Homeowner Insurance
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Factors that cannot be considered for the Cost of Homeowner Insurance

Insurers are not permitted to raise your premium, cancel or renew your policy, or refuse to issue a policy if you or your insurance producer inquires about coverage for a loss and the inquiry does not result in the payment of a claim.

The death of a spouse Insurance companies cannot raise your premiums solely because your spouse died.

When pricing a homeowners insurance policy or deciding whether to cancel, non-renew, or refuse to issue a policy, insurers are not permitted to consider an individual’s credit history.

Insurers are not permitted to use an individual’s status as a victim of a violent crime as the sole basis for cancelling, non-renewing, refusing to issue a policy, refusing to pay a homeowners insurance claim, or taking any adverse underwriting action, such as raising a premium, adding a surcharge, or removing a discount.

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