4 Variables That Affect Home Insurance Rates

Searching for a home requires more than attending open houses and scouring through listings. If you open a mortgage, lenders will usually require you to purchase home insurance before you can make the deal official. Even if you pay for the entire home in cash and choose to add a policy later, there could be downsides to waiting – the condition of the home itself can influence your rates, and you may end up wishing you had considered home insurance costs earlier. So before you go house hunting, explore these various factors that impact home insurance rates.

Characteristics of the House

How old your home is and the structure and materials it’s made out of commonly impact your premium. The longer your home has been around, the more likely it is to run into issues and cost a lot to patch up, so insurance companies may charge you more for coverage. Whether your home is constructed with wood or brick also makes a difference in how insurance companies view the associated risk.


Where you plan on living impacts more than your everyday commute. An insurer is often going to check how far you live from a fire hydrant or fire station, for example. Living in a remote area where it could take a long time for a fire truck to reach you could cost you. Your neighborhood’s crime levels could make an impact on premiums too. On the other hand, you may be able to get a premium reduction by equipping your home with alarms and security cameras. Making your home safer lowers the possibility of someone successfully breaking in, which can reassure insurance companies.

Claims History

If you’ve filed your share of insurance claims in the past, you might end up paying for that now. A thick claims history could indicate that you’re more likely to file claims in the future. It suggests that you have a tendency to file claims for events that could’ve been prevented or damage that wasn’t that serious. Your past behavior may depict you as an expensive risk, whether or not that’s still currently true.

Credit History

Insurance companies may also use a credit-based insurance score to help determine premiums. Like a credit score, your home insurance score is based on your credit report. Your payment history and credit utilization, amongst others, are major influencing factors. Unlike credit scores, though, this score is used by insurance companies to help predict insurance risk, not how likely you are to repay your debts. Insurance providers have found that irresponsible credit behavior is correlated with higher insurance risk. Not everyone agrees with this practice, however. A handful of states ban using credit-based insurance scores to determine home insurance premiums, so check with your state insurance department if you’re concerned about your credit affecting your insurance rates.

Bottom Line

Consider all of these factors when you’re searching for a home and a home insurance policy. You might not be able to influence the rate that an insurer gives you, but you can control some of these factors.

Remember to check your credit report and make sure everything’s in order, so that your home insurance score is based off of accurate information. Tracking your home insurance score on Credit Karma can also give you a big-picture look at how your financial actions influence your score over time.

Speaking of time, shopping around for a home insurance policy takes patience. But keep these factors in mind during your quest for a home, and you’ll be on your way!

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