Reasons for Inflated Home Insurance Cost

Top Reasons for Higher Home Insurance Rates

(Time to find out why your home insurance rates are higher than your neighbors)

Causes for home insurance to be higher

Say you've recently purchased or renewed your homeowners insurance, and you're chatting with the neighbors about the surprising large cost of your home insurance. You quickly discover that they're paying much less than you are, but with a similar size house. So what gives? 

Until you own a home, you don’t realize that there are a variety of factors that could cause your insurance to be higher than you think. Of course, every homeowner wants low insurance without compromising protection, which is why an independent insurance agent can help you find the best-priced insurance for you. But knowing what can increase your home insurance rates is good to have in your back pocket as you navigate homeownership. 

How Much Is the Average Home Insurance Premium?

The average annual cost of homeowners insurance is $1,192 nationwide, but that cost can vary region to region, based on hazards like floods and earthquakes. Find a complete state average cost list here >

What Causes Higher Home Insurance Rates?

There are a number of factors that can affect home insurance premiums in a positive and negative way. When an insurance company is assessing the risk of your home, they look at everything from location and structure to your personal history, the history of the home, and even potential environmental factors.

Unfortunately, there are quite a few factors that can increase the cost of your home insurance premium. Some you can’t do much about, but others are manageable and something you can look out for when purchasing or building a home. 

Personal factors that may raise your insurance premium

  • Credit history: In nearly every state, your insurance company can use your credit history when putting together your home insurance rate. In fact, the only states where this is not legal are California, Maryland, and Massachusetts. When looking at your credit history, insurance companies are paying attention to the timeliness that you pay your bills, your number of credit accounts, new applications for credit, outstanding debt levels, and the overall length of your credit history.
  • Claims history: If this isn’t your first home and you have a history of home insurance claims, the insurance company could decide to raise your premium in the event that you’re more likely to have more claims.
  • Marital status: Married couples tend to file fewer claims than single people, and insurance companies tend to look at a married couple as more mature and less risky.
  • Pets: Sometimes the breed of your dog can negatively impact your homeowners insurance. Common breeds that tend to raise premiums are Pit Bulls, Rottweilers, Doberman Pinschers, German Shepherds, Siberian Huskies, Akitas, and wolf-dog hybrids.
  • Home-based business: If you run your business out of your home, you have additional equipment that needs protection. It’s best to take out an additional insurance loan to protect your business rather than let your home insurance cover it.

Home-related factors that may increase your premium

  • Location:  Homes that are located in areas prone to hazardous natural disasters are likely to pay more in home insurance. 
  • Dangerous features: Pools, trampolines, tree houses, all of these features are fun but dangerous. 
  • Under-insuring: Most people do not realize that they need enough home insurance coverage to 100% replace their home. This value could be more than what the home is worth. If that’s the cause it results in a higher premium.
  • Age and construction: The older your home, the more susceptible it is to damage. If you purchase an older home with a roof that hasn’t been replaced in a long time, your premium will be higher. 
  • Wood-burning stoves: On average, wood-burning stoves increase premiums by 2% because they account for more than 36% of rural home fires every year, according to the US Fire Administration. Proving that you had your wood stove installed by a licensed contractor can help reduce the costs.
  • Being close to a body of water: Living close to the ocean or a large lake increases your chance of flooding and therefore raises your premium.
  • Home safety: If your house is easily accessible and limited on home safety devices, insurance companies may see it as a higher risk of being burglarized and therefore increase your premium. 
  • Expensive assets: Home insurance covers your basic assets including jewelry, artwork, etc., but if you have luxury items like a wedding ring or expensive piece of art that you want to be covered, it will cost you.

Can my premium increase after I buy my home?

Yes, homeowners should be reevaluating their home insurance annually. But aside from that, there is a possibility that your home insurance will be more one month than it was the last, or increase when you go to renew because of a variety of factors.

  • Remodeling: The more valuable you make your home, the higher your insurance premiums will be. This isn’t always a bad thing. If you put $100,000 worth of upgrades into your home, you want to make sure your insurance follows suit.
  • Home value: Insurance rates are based highly on the market value of your home. If your home jumps in value, that means the cost to rebuild increases which means you’ll need more insurance for protection. 
  • Construction costs: Similar to the home value, if construction costs are up and it would cost more for your home to be rebuilt than is previously quoted in your premium, your rates will increase. 
  • Your home needs upgrades: That’s right, sometimes an insurance company will force you into upgrading your home if you want to keep your rates low. Outdated safety, piping, and other features are risky to insurance companies.
  • Your credit or insurance score decreases: Your insurance score is assigned to your policy when you purchase your home insurance. It’s based off your claim history, credit score, and the safety features of your home. Whenever your policy is up for renewal, the insurance company will reevaluate your insurance score. If it’s gone down significantly, they may increase your premiums.

Are Discounts Available for Home Insurance?

While there are a variety of factors that can increase your home insurance rates, there are also a variety of discounts and ways to lower your insurance rates. The four major types of home insurance discounts include safety, bundling, group, and loyalty.

Comparing Home Insurance Quotes with an Independent Insurance Agent

An independent insurance agent will review your needs and help you find the best home insurance coverage for your property. They'll also compare policies and quotes from multiple insurance companies to make sure you have the proper protection to keep you and your possessions safe. Find an independent insurance agent in your community here.

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