Have you ever wondered how your homeowners’ insurance rates are determined?. Or why is it possible that your rate can vary so much among carriers when purchasing for your policy?. There are actually many factors that affect your rate, which We outline below to help you better understand what you can and cannot control to lower your premium?.

Factors you can control:

Your homeowners’ insurance rate is affected by the condition, age, and location of your house. If your home is an older construction, regular updates indicate to your insurance company that you are a responsible homeowner, which lowers your risk for a claim and therefore, qualifies you for a discounted rate. Some practical maintenance you can do includes replacing your roof if it’s older than at least 15 to 20 years and updating wiring, plumbing, and HVAC systems.

If you are moving, you may consider:

Buying a newer building, which typically qualifies for a lower homeowners’ insurance rate because it is in overall better condition. Also, if feasible, you may choose a home constructed with fireresistant materials like brick and concrete, which is more affordable to insure than a home built with soft, flammable materials such as wood.


Near a fire department or fire hydrant. In an area where building costs are lower to manage the total cost of your claim in the case, you have to rebuild your home.


  • Natural disaster-prone areas
  • Close proximity to high crime areas

Your property risks, such as having a swimming pool, trampoline, guest house, and aggressive dog breed. Each of these will increase your homeowners’ insurance rate, so make sure the benefits outweigh your costs.

How you handle claims:

Try not to report small claims to help keep rates lower because filing frequently can increase your homeowners’ insurance rates.

Insurance companies consider these factors when calculating your insurance score, which predicts the likelihood of you filing a claim. The higher the score, the higher the risk, and therefore your premium.

The insurance provider’s risk appetite:

In addition to considering changing your behavior and following some simple steps discussed above to receive a more favorable rate, you might also wish to seek assistance from an experienced and independent broker. Since most insurance companies tend to specialize in insuring certain homes, it is important to have an impartial partner who will find a carrier with a risk appetite that matches your situation and negotiate on your behalf with a number of competing companies for the best rate.

Factors that may be beyond your control:

Unfortunately, there are certain things you cannot change. One of these is the exact calculation method of scores, which varies greatly among insurance carriers. Also, insurance companies group the scores into different premium tiers, up to 27, which can place you in different premium categories with each carrier, but typically, the closer you are to tier one, the better your insurance premium is with that specific carrier. For instance, if you have good credit and employment history, and keep your home well maintained, then more than likely you will be placed in a lower tier in general, but the specific tier will be different with each carrier.

Actuarial Information:

Furthermore, insurance carriers determine their tiers based on actuarial information. For instance, some carriers will choose to insure an older population because they are considered a lower risk group, for which you may not qualify.

State Regulation:

Also, remember that insurance is regulated by each state, which can affect how your rates are calculated. For instance, in some states, it is illegal for insurance companies to factor in your credit score when calculating your insurance rate, while others allow it.

Having a good understanding of the full picture will greatly help you focus on areas that are within your control to change, which in turn will improve your chances for a better premium, rather than worrying about aspects you cannot affect.