Here is the 2nd part of the article from the spring 2016 Insurance Institute Bulletin which talks about what factors insurance companies can use to determine the cost of insurance.

  • Home’s Age and Type of Construction
  • A new home’s overall structure is likely to be in better shape than that of an older home. Therefore, newer homes have lower homeowners insurance rates. Important features in a new home include:
    • Electrical wiring
    • Plumbing
    • HVAC system
  • Additionally, homes constructed with sturdy, fire-resistant materials like brick, concrete and stone are cheaper to insure than homes constructed with soft, flammable materials like wood.
  • Home’s Location
  • A home’s location impacts rates for homeowners insurance in a major way. Rates may be higher if:
    • The home is at-risk for wildfires, tornadoes or other natural disasters
    • The home lies in a high-crime area
    • Building costs in the area are high
    • There is not a fire station within 5 miles
  • Claims History
  • If you don’t need to file an insurance claim, don’t. Homeowners who file frequent claims pay higher rates for homeowners insurance. To keep costs low, handle small fix-it claims yourself.
  • Risk Factors on the Property
  • Properties with risk factors will incur higher homeowners insurance rates. Pricey risk factors include:
    • Swimming pools
    • Guest houses
    • Aggressive dog breeds
    • Trampolines
  • Many insurers won’t extend coverage for these perils, and some will deny coverage altogether.
  • Credit Score
  • The higher a homeowner’s credit score, the lower their risk level. Statistically, homeowners with good credit file fewer claims than homeowners with poor credit. As a result, they’re rewarded with cheaper homeowners insurance rates.



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