Explainer: Home Insurance Costs

In last month’s blog, we discussed all the factors that contribute to your auto insurance rate. We’re back again with another property and casualty explainer, but this time, continue reading to learn more about how your homeowners insurance rate is calculated.


  • Where you live, including your state and maybe even ZIP code, is a major factor in the cost of your insurance. Different locations have varying risk profiles, due to things like crime, weather incident rates, and the cost of labor and construction materials in your region.

Dwelling coverage

  • This is the part of your policy that covers the physical infrastructure of your home. Your home’s major systems, like HVAC and plumbing, as well as building materials used, square footage, and any unique features are all part of your dwelling coverage cost. This portion varies by company based on their proprietary and unique modeling.

Credit history

  • Similar to auto, insurers in some states take into account your credit-based insurance score to gauge your risk, which might affect your homeowners insurance costs.

Claims history

  • After filing any homeowners insurance claim, it will be visible to insurance companies for five to seven years. If you have a claims history, insurance companies consider you more likely to have another claim in the future, which can increase your cost.

Marital status

  • Statistics show married couples have a lower probability of filing a claim, so they often receive lower rates than an unmarried homeowner.

Age of home

  • Older homes are far likelier than newer homes to have aging materials or upcoming repairs.


  • If your policy has a higher deductible, you may pay a lower premium. Some insurers offer diminishing deductibles on your policy by offering credits towards your deductible for as long as you don’t file a claim.


  • There are other factors insurance providers consider when calculating your insurance rate, such as the type of policy, distance from water, distance from a fire station, your pets and their breed, or other items at your home that pose nuanced risks.

Source: Bankrate