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HomeMoneyPersonal InsuranceFactors that affect home insurance rates

Factors that affect home insurance rates

Insurance companies typically base their rates on risk. The greater the risk, the more you’re going to pay. And at times, it’s completely out of your control. If you live in an area that’s prone to disasters, you’re more likely to pay higher rates. This might seem unfair, but that’s how insurance works. Check out how premiums can either increase or decrease:

Filling Claims

Filing claims, particularly multiple claims can lead to higher rates. Once you submit a claim, your insurance provider pays to resolve the issue. But the truth is that most insurers prefer working with clients who don’t file claims.

Bad Credit Rating

Claims can significantly increase your home insurance costs. And if you have got bad credit, things could even be worse.

The percentage increase for those with bad credit is approximately 127 percent higher than those with good credit. That’s an average of $1,700 in terms of a home insurance rate increase.

Types of Materials Used

When it comes with home builders, how your home was constructed plays a significant role. For instance, home insurance companies charge 4 percent more on average for log homes and 1 percent more for aluminum homes.

Depending on your construction you can also pay less.  For new construction, you’ll get a 36% discount rate and for fire-resistive materials, you’ll get 12% off the cost of your premiums. The average discount rates for superior building, masonry, and hail-resistant roofs are 11%, 6%, and 3% respectively.

From the above information, it’s clear that insurers love new buildings. Nowadays, builders follow stricter construction practices than before. An insurer can’t be certain how a 50-year-old homer was constructed. That’s why they’ve more confidence in modern buildings. 

Regular Maintenance

Your insurance provider expects you to perform regular home maintenance. And one of the most important parts of a home is the roof. A leaking or damaged roof can result in hefty home insurance claims.

So, it’s always important to keep a close eye on your roof for any kind of damages. Plus, your insurer also expects you to repair or replace the roof when it starts to show wear. Most insurers start to get concerned about roofs once they turn 20 or 30. And if there are any overhanging tree limbs, they’ll ask you to remove them.

On average, your home insurer will give you a 5 percent discount on your policy when you upgrade your roof. That translates to average savings of about $80 per year on your premiums. A plumbing upgrade could also save you another 0.6 % off your home insurance. Of course, this might sound like a small discount, but multiple discounts could add up in the long run. In a nutshell, regular maintenance will help you save on home and contents cover


There are numerous aspects that affect the cost of home insurance. Some can increase your rates while others can significantly reduce them. With the above tips, you can easily differentiate between these factors and choose what works for you. For instance, you may want to consider conducting regular maintenance on your roof and minimizing claims.

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