11 homeowners insurance cost factors

Your home’s location, its reconstruction cost, and your credit history are all factors that can affect the cost of your homeowners insurance policy.

Pat Howard 1600Kara McGinley

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Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Kara McGinley

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

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This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

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By

Britta M. Moss

Britta M. Moss

Property & casualty claim consultant and expert witness

Britta M. Moss, CPCU, SCLA, AIC-M, has over 25 years of insurance industry experience. In her work as a property and casualty claim consultant, she provides consultation and expert witness services in claim handling standards, practices, and norms.  She has been retained by law firms representing plaintiffs and those representing insurer defendants involved in disputes or litigation regarding coverage analysis, investigation, liability determination, damage evaluation, negotiation and settlement.  She is a graduate of The Ohio State University. 

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Like most insurance products that protect against financial losses, the cost of homeowners insurance depends on how much of a risk you are to insure. You might already know that the size of your home, its location, and its construction style all affect your home insurance premiums. But there are also some lesser known rate factors that aren’t necessarily related to your home itself. Read on to learn about what insurers may consider when calculating your homeowners insurance premiums.

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What factors affect the cost of homeowners insurance?

The average cost of home insurance is $1,899 per year, but rates are on the rise due to rising construction costs, inflation, and an increase in natural disasters. Around 90% of homeowners saw their premiums increase from May 2021 to May 2022, according to our 2022 Home Insurance Pricing Report.

Here are 11 factors that could be affecting your home insurance costs.

  1. The location of your home

  2. The replacement cost of your home

  3. Your policy deductible

  4. The condition of your roof

  5. Your dog’s breed

  6. Your claims history

  7. The age of your home

  8. A home renovation or remodeling project

  9. A swimming pool or trampoline

  10. Your credit history

  11. Home safety and protective features

1. The location of your home

Home location is one of the biggest factors that insurers use to determine homeowners insurance premiums. Generally speaking, if you live in an area that’s prone to natural disasters like hurricanes, tornadoes, or wildfires, you’ll pay more for homeowners insurance since the risk of insuring your home is higher. Policy rates tend to be higher in cities than suburban or rural areas, since homes typically cost more to build in densely populated areas. When it comes to location, insurers will also consider the following:

  • Your ZIP code and proximity to fire stations or fire hydrants — if your home is less than a 100 feet from either you may receive lower rates.

  • Property crime rates in your ZIP code — if your neighborhood experiences frequent home break-ins, that could also result in higher rates.

2. The replacement cost of your home

Replacement cost refers to the amount it would cost to rebuild your home with construction materials of similar type and quality. Your home’s replacement cost, or rebuild value, is based on many factors, including your home’s:

  • Age

  • Square footage

  • Architectural style

  • Number of rooms

  • Local rebuild costs in your area 

Replacement cost is not the same as your home’s market value — how much it sells on the real estate market. Instead, your homeowners insurance premiums will be based largely on the rebuild cost of your home, and therefore the amount of dwelling coverage you need. 

Below is the average annual and monthly costs for homeowners insurance by dwelling coverage amount. 

Dwelling coverage amount

Average annual cost

Average monthly cost

$100,000

$946

$79

$200,000

$1,442

$120

$300,000

$1,899

$158

$400,000

$2,481

$207

$500,000

$3,066

$256

Because inflation has caused the cost of labor and supplies to skyrocket in recent months, the current rebuild cost of your home may be significantly higher than your dwelling coverage amount — leaving you underinsured.

One way around this is to purchase inflation guard coverage, a home insurance  endorsement that automatically increases your policy’s dwelling coverage limit to reflect the current construction and labor costs in your area. Just keep in mind that adding this coverage to your policy will also increase your home insurance rates even more.

3. Your policy deductible

Another factor that directly impacts your home insurance premiums is your policy deductible amount. When you file a claim, your policy deductible is the out of pocket amount you’re responsible for paying before your insurance company will cover the remainder of a loss. Simply put, the higher your policy deductible is, the lower your insurance premiums will be. 

Below are how some major insurers charge for a $500 vs. $1,000 vs. $2,000 deductible.

Company

$500 deductible

$1,000 deductible

$2,000 deductible

State Farm

$2,327

$2,039

$1,551

Allstate

$1,776

$1,596

$1,104

USAA

$1,090

$1,432

$332

Nationwide

$1,951

$1,955

$1,781

Chubb

$2,190

$1,922

N/A

As you can see, a policy with a $2,000 deductible has the cheapest premiums. Though it may be tempting to set your deductible as high as possible, be weary of setting it so high that you don’t receive a decent claim payout. 

But if you’re comfortable paying for smaller losses out of pocket and only filing claims on expensive property damage, opting for a higher deductible is an effective way to save on homeowners insurance.

4. The condition of your roof

The age and condition of your roof can also significantly impact your policy premiums. A newer roof has a greater likelihood of protecting your home against the elements than an older roof. 

For that reason, insurers will often provide policy discounts if your roof is under a certain number of years old or if it’s constructed with fortified roofing materials. Conversely, if your roof is in bad shape or is over 10 to 15 years old, you’ll likely see a policy surcharge.

Here's how much major insurers charge for home insurance based on the age of your roof.

Company

Average annual cost with a new roof

Average annual cost with a 20-year-old roof

Allstate

$1,441

$1,762

American Family

$1,514

$1,794

ASI Progressive

$1,534

$1,860

Auto-Owners Insurance

$1,348

$1,506

Nationwide

$1,482

$2,077

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5. Your dog’s breed

Having a high-risk dog breed that home insurance companies categorize as “dangerous” can also affect your home insurance costs. Dog bite liability payouts are an expensive problem for insurers, costing around $49,000 per claim as of 2021, according to the Insurance Information Institute (III). [1]

To limit their exposure, many insurers will either exclude certain breeds from coverage or charge higher premiums if you have a German shepherd, pit bull, Rottweiler, or another breed that’s considered dangerous.

According to our analysis of 2022 home insurance rates, many large home insurance companies seem to be friendly toward dog owners. For example, the average cost of homeowners insurance with ASI Progressive is $2,618 per year. But if you own a high-risk dog, the price only goes up $26 per year to $2,644 annually. Keep in mind that some insurers may require your dog to go through a certain amount of training if it’s shown aggressive behavior in the past. 

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6. Your claims history

Although filing a claim or two within a three- or five-year span shouldn’t have too much of an affect on your premiums, be careful not to file too many. Yes, you pay for homeowners insurance to help cover financial losses in the event of unexpected damage or loss. But your insurance company will view a history of frequent claims as a big red flag. Theft, water damage, and dog bite claims in particular can have a significant impact on your policy rates.

Here's a look at how much annual home insurance rates vary for popular insurers based on the number of claims filed over a five-year period:

Company

No claims

1 claim

3 claims

5 claims

AIG

$1,266

$1,452

$1,959

$2,188

Allstate

$1,717

$1,930

$2,904

$4,446

ASI Progressive

$1,884

$2,040

$2,665

$3,005

Erie

$1,465

$1,534

$2,440

$3,919

USAA

$1,547

$1,634

$2,174

$2,842

7. The age of your home

Newer homes tend to have lower home insurance rates since you're less likely to file a claim compared to older home with outdated appliances and home systems.

Here's a look at how much annual home insurance rates vary for popular insurers based on the age of your home:

Company

New home

10-year-old home

20-year-old home

50-year-old home

Allstate

$947

$1,580

$1,726

$1,717

ASI Progressive

$659

$1,354

$1,796

$1,850

Erie

$709

$1,179

$1,492

$1,589

State Farm

$1,143

$1,727

$1,931

$1,939

USAA

$836

$1,251

$1,501

$1,566

8. A home renovation or remodeling project

Home renovations and remodeling projects can also impact your home insurance premiums. Adding onto your home, renovating your kitchen, replacing your roof, or adding a pool all increase your home’s replacement cost.And more insurance coverage on your home typically means higher insurance rates.

For example, adding a wood-burning fireplace or stove to your home could mean higher rates, since your home is at greater risk of fire.

If you recently renovated your home or plan on doing so, be sure to give your insurer a heads up so that they can extend your dwelling coverage to cover the updates.

9. A swimming pool or trampoline

Having a swimming pool, trampoline, or any other “attractive nuisance” on your property increases your personal liability risk and necessitates higher liability protection limits. 

Most insurance companies offer a minimum of $100,000 in liability coverage, but if you have a swimming pool or trampoline, you may want to consider increasing these limits to $500,000 or more. In the event a guest is badly injured while using your trampoline or pool, having that extra amount of protection could be the difference between being able to cover an expensive lawsuit and having to forfeit assets to cover the settlement.

Below is how much several large insurance companies charge for home insurance if you have a pool vs. if you do not have a pool.

Company

Average annual cost without a pool

Average annual cost with a pool

State Farm

$2,039

$2,039

Allstate

$1,596

$1,597

USAA

$1,432

$1,432

ASI Progressive

$2,618

$2,630

Erie

$1,346

$1,515

As the table above demonstrates, how much a pool will affect your home insurance rates depends on the insurance company, as well as other factors about the pool itself. For example, from our analysis, Erie charges over $160 more per year for home insurance if you have a pool. 

10. Your credit history

Insurance companies will also run their own version of a credit check to determine how much of a risk you are to insure. If you have good credit, you’ll be considered less of an insurance risk than if you have bad credit. 

The reason for this is simple: Homeowners who have a low credit score are considered more likely to file insurance claims than homeowners with a high credit score. The less prone you are to filing claims, the lower your insurance rates will be. 

Here’s a look at how much major insurers charge on average for home insurance if you have good credit vs. poor credit.

Company

Average annual home insurance cost with good credit

Average annual home insurance cost with poor credit

State Farm

$2,039

$3,966

Allstate

$1,596

$2,705

USAA

$1,432

$2,264

Nationwide

$1,955

$2,655

Chubb

$1,922

$3,888

→ Learn more about how your credit history affects your insurance rates

11. Home safety and protective features

Home security systems, fire sprinklers, impact-resistant garage doors and windows, water-leak sensors, and other preventative features can all lead to discounts on your homeowners insurance rates

Taking measures to better protect your home and decrease the likelihood of storm damage or burglary lowers your policy cost for a couple of reasons: It directly lowers the risk of damage or loss, and it signals to your insurance company that you take proper care of your home.

Below is the average amount you can save if you install a deadbolt, smoke alarm, or burglar alarm.

Average annual cost

Deadbolt

Percentage difference

Smoke alarm

Percentage difference

Burglar alarm

Percentage difference

Average

$1,899

$1,897

-0.09%

$1,892

-0.37%

$1,846

-2.97%

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What factors are causing homeowners insurance costs to increase?

Home insurance premiums increased across the United States from May 2021 to May 2022, according to the Policygenius Home Insurance Pricing Report. In some states, home insurance prices rose faster than inflation.

This is due to multiple factors, including the rise in inflation and increase in expensive natural disasters. Since home insurance premiums are based on the rebuild value of your home, when the cost of construction and labor increases so do rebuild costs. Pair this with costly and frequent natural disasters (which leads to more claims and a higher demand for construction), and you're left with more expensive home insurance premiums.

How to save on homeowners insurance

Here are a few ways you can save on homeowners insurance:, 

  • Re-shop your home insurance policy each year. We recommend re-shopping your homeowners insurance annually to make sure you’re not missing out on a better deal elsewhere. The licensed agents at Policygenius can help you compare quotes from multiple insurers at once to make sure you’re getting the best coverage at the best price

  • Check out what discounts you qualify for. We already mentioned safety discounts, but many insurers also offer discounts for bundling your home and auto policies, signing up for paperless billing, and living in a gated community. 

  • Raise your deductible. Opting for a high-deductible policy is the easiest way to cut down on homeowners insurance costs. Just make sure you have the savings to pay for any small-dollar claims out of your own pocket.

  • Remove outdated wiring or plumbing. If you live in an older home and it contains outdated wiring — like tube wiring — removing that and installing newer materials will likely result in cheaper rates.

  • Take steps to mitigate your risk. Many states that experience frequent weather-related disasters — like wildfire-prone California and hurricane-prone Florida — offer programs to help you mitigate your risk for their respective natural disaster risks. If you fire-proof your home or mitigate your wind risk you may be able to score a discount on your home insurance. 

→ Read about 5 home improvements that can lower your home insurance rates

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Frequently asked questions

Does my age affect home insurance?

While policyholder age doesn’t have a huge impact on homeowners insurance rates, most insurers offer small discounts on coverage for people 65 and older. Retired homeowners are more likely to spend more time around the home than younger homeowners who work a 9-to-5 job. More frequently occupied homes aren’t as prone to break-ins and sustained damage from house fires or burst pipes.

What factors affect insurance premiums the most?

Factors like where you live, your home’s replacement cost, and your policy deductible generally affect your home insurance premiums the most.

Methodology

The Policygenius editorial team focused on comparing rates from some of the largest home insurance companies in the industry, since they hold the majority of the market share.

Rates were provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C., for a 40-year-old homeowner with no claim history, good credit, a $1,000 deductible, and the following coverage limits:

  • Dwelling: $300,000

  • Other structures: $30,000

  • Personal property: $150,000

  • Loss of use: $60,000

  • Liability: $300,000

  • Medical: $1,000

All rates based on the above coverage limits except where otherwise noted.

Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of costs. Your actual quotes may differ.

Policygenius prides itself on providing transparent, unbiased reviews of home insurance companies. Though we make money when you purchase a policy through our site, this does not affect our editorial independence and rigorous editorial standards.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

editorial standards.
  1. The Insurance Information Institute

    . "

    Spotlight on: Dog bite liability

    ." Accessed May 25, 2022.

Authors

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

gray twitter icon linkgray linkedin icon link

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Senior Editor & Licensed Home Insurance Expert

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

gray linkedin icon link

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

Expert reviewer

Property & casualty claim consultant and expert witness

Britta M. Moss

Property & casualty claim consultant and expert witness

gray linkedin icon link

Britta M. Moss, CPCU, SCLA, AIC-M, has over 25 years of insurance industry experience. In her work as a property and casualty claim consultant, she provides consultation and expert witness services in claim handling standards, practices, and norms.  She has been retained by law firms representing plaintiffs and those representing insurer defendants involved in disputes or litigation regarding coverage analysis, investigation, liability determination, damage evaluation, negotiation and settlement.  She is a graduate of The Ohio State University. 

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