Home Insurance Rates

The principal factor which determines home insurance rates is risk. An insurance rate is normally expressed as the premium cost for each thousand dollars of sum insured, so the amount of home insurance coverage you apply for is not a factor in setting rates.

The risk to which an insurer is exposed from the home insurance policies which it has issued is a composite of a number of factors, and these can be broadly categorized into three areas. When you are looking for coverage it is therefore helpful to divide the factors which determine home insurance rates into these three areas as follows:

1. You, being your characteristics and track record;
2. Your home, namely where it is, what it is and what it has;
3. The types of coverage you are looking for, and the add-ons you want.

Factors Affecting Rates

Some of the more important factors affecting home insurance rates are:

• Your Credit Rating

  Research conducted by actuaries shows a correlation between how well people manage their financial affairs and the number of insurance claims they make. Insurers therefore use credit scores, which are a measure of personal financial management, to construct 'insurance scores' for setting home insurance rates.

• The Location of Your Home

  Your premium is likely to be higher if you live in an area prone to extreme weather or other natural disasters such as hurricanes. It is also likely to be higher if your home is located in an area which has a high crime rate. On the other hand, your premium may be lower if your home is located near a fire station or close to a fire hydrant.

• The Age and Type of Construction of Your Home

  The age of your home can have a significant impact on your premium rate. You could receive a discounted rate if your house is new, or if it has been recently and substantially renovated. You may also qualify for a rate discount according to the type of construction of your home, such as brick or masonry versus wood framing.

• The Security and Safety Features Installed in your Home

  If you have certain security devices installed in your home, you could qualify for rate reductions. You may receive one or more discounts on your premium if your home has deat-bolt locks, smoke alarms, interior sprinklers, or a burglar alarm. Safety features can also reduce your premium rate, such as shatter-proof glass.

• Your Deductible

  A deductible is the proportion of any insured loss you are required to pay out-of-pocket before recovering any amount from the insurance company. Selecting a higher deductible will reduce your premium. For example, you could save as much as 25% by increasing your deductible from the standard level of $250 to $1,000.

Compare Home Insurance Rates

While risk is the main factor affecting home insurance rates, the next most important factor is the pricing policies of insurers. This is illustrated by the fact that insurers can quote very different premium rates for exactly the same policy on the same home.

There is only one reliable way to find out which insurers have the most competitive pricing, and that is to get a range of home insurance quotes. However, that can be a time-consuming process, especially if you do that yourself by contacting insurance companies one by one and completing a new set of forms for every quote you receive.

The most effective way is to use our systems and resources and complete our simple online form, starting with your zip code above. By filling out one form only, you will be entitled to receive multiple quotes from leading insurers in your state, and you will be able to compare their home insurance rates side by side before making any decision.