Your home insurance premium is based on a number of variables that tell insurers about your risk. For example, location is a major factor in your rates – especially if you’re in a region prone to extreme weather.
For example, some regions, like California, may be more prone to wildfires, whereas coastal homes in Florida face hurricane risk. Even your neighborhood says something about your likelihood of experiencing a claim: gated communities, for example, may be less prone to property theft than unsecured neighborhoods.
Here are the most common factors that impact your home insurance costs.
Your home’s characteristics
Your home’s traits are a significant factor in how much your coverage costs – and the types of coverage you may need. For instance, your premium may be impacted by the home’s:
All of these components can affect how well your home can weather a storm. That helps your insurance company determine what it might cost to cover your claims, which in turn impacts your premium.
As we mentioned earlier, where you live significantly impacts your homeowners insurance premium. Areas with a history of above-average crime rates may have higher premiums. Similarly, areas with greater exposure to natural disasters such as flooding and hurricanes may also see higher rates, because these types of risks increase the chances that you (and your neighbors) may need to file a claim.
By contrast, homes within five miles of a staffed fire station or 1,000 feet of a fire hydrant tend to have lower premiums.
The amount you are willing to pay toward a claim will either lower or raise your premiums. Typically, the higher your deductible, the lower your premium will be.
One important caveat: While reducing your premiums can be a great way to save money, those savings can quickly be eliminated if you end up having to file a claim and pay a large deductible out-of-pocket. If you're considering raising your deductibles to lower your premiums, make sure that the amount you pick is one you can afford in the event of a claim.
Your risk management
Depending on where you live, your premium may change based on your home’s security. For example, Kin customers can get a discount for centrally monitored security alarms. Sprinkler systems and automatic water shut off systems may also qualify you for a reduced premium.
All of these items help to keep your property safe, reducing the likelihood of you having to file a claim, as well as the potential size of the claim, should you need to file one.
Your claims history
Premiums are influenced by the number of claims you have made in the past. Insurers often offer lower premiums to policyholders with a clean claims history.
It’s worth noting that while people have claims histories, individual homes have their own claims histories as well. So before you buy a house, you may want to check out its insurance report. It could put you at risk for higher premiums.
Folks with a good insurance score tend to have lower premiums, as can older applicants. (Wisdom isn’t the only thing that comes with age!) In some cases, seniors may even qualify for discounts. Likewise, new homeowners may get a break on their mortgage cost, so they may qualify for discounted insurance rates.
Your landlord status
If you rent out your property, you may need additional coverage to address the risks you take on as a landlord. As you might’ve guessed, more coverage almost always means higher premiums.
Depending on the type of property you’re renting and how often you’re renting it out, you may need an entirely separate landlord insurance policy. However, Kin customers in some states can get House & Property insurance that can be customized to their particular needs. Check out our guides for:
Your personal belongings